Holding

The insurer is liable only up to the per‑passenger maximum of Rs 5,000 (subject to the aggregate limit of Rs 75,000), and the petition is dismissed.

Summary

The petitioner, owner of a stage‑carriage bus, claimed that the insurer should indemnify him up to Rs 75,000 under Section 95(2)(b)(ii)(2) of the Motor Vehicles Act, 1939, arguing that the per‑passenger limit in sub‑clause (ii)(4) was inapplicable. The Supreme Court examined the pre‑1982 wording of Section 95(2)(b), which provides both an aggregate liability limit for an accident and a separate maximum amount payable per passenger. It held that the per‑passenger limit of Rs 5,000 (for a bus carrying 31‑60 passengers) is a ceiling, not a floor, and must be respected alongside the aggregate limit of Rs 75,000. Consequently, the insurer’s liability was limited to Rs 5,000 for the deceased passenger, subject to the aggregate cap, and the petition was dismissed. The Court also suggested legislative reforms to raise compensation limits and clarify the term “legal representative.”

Issues considered

The correct construction of Section 95(2)(b) of the Motor Vehicles Act, 1939 regarding the interplay between the aggregate liability limit and the per‑passenger limit.
Whether sub‑clause (ii)(4) of Section 95(2)(b) sets a minimum or a maximum liability per passenger.
Whether the insurer is liable to pay Rs 75,000 in the present case despite the per‑passenger ceiling.

Legislation cited

Motor Vehicles Act, 1939s. 95(2)(b), s. 95(2)(b)(ii)(2), s. 95(2)(b)(ii)(4)
Motor Vehicles Act (Amendment) Act, 1982 (Act 47 of 1982)s. 95(2)(b)(ii)
Workmen's Compensation Act, 1923

Subjects

Motor Vehicles ActSection 95Insurer liabilityPassenger compensationAggregate limitPer passenger limitSupreme Court interpretationLegislative amendment 1982Legal representative

Judgment

,..\.
M.K. KUNHIMOHAMMED A
v.
P.A. AHMEDKUITY & ORS.

SEPTEMBER !, 1987
y
[E.S. VENKATARAMIAH AND K.N. SINGH, JJ.] B

)._ Motor Vehicles Act, 1939: Section 95(2)-Death of passenger in
accident-Limits of liability of insurer-Amendment of Act regarding

- 1-
distinction between public vehicles and other motor whicles etc.,
enhancement of limits of compensation insurance of motor vehicles
against third party risks and expansion of definition of 'legal represen-
tative' with regard to claims-Suggestions made.
c
The petitioner was the owner of a bus being run as a stage car-
riage. On 24. 7. 78 while .carrying passengers this bus met with an acci-
dent, as a result of which one passenger died. The Motor Accident
Claims Tribunal held that the accident took place due to the negligence D

"" on the part of the driver and awarded compensation of Rs.56,800 to the
legal representatives of the deceased. It further held that the liability of
the insurer to indemnify the petitioner was limited to Rs.5,000 as the
policy specifically ltmited the insurer's liability to what had been pro-

, vided bys. 95(2)(b)(ii)(2) and (4) of Motor Vehicles Act, 1939.

The appeal filed by the Petitioner was dismissed by the High
E
"' Court.

'( In the Special Leave Petition before this Court, it was contended
on behalf of the petitioner that the insurer was liable to indemnify the
petitioner upto a limit of Rs. 75,000 under s. 95(2)(b)(ii)(2) of the Motor F
Vehicles Act, 1939 and that the further limit mentioned in s. 95(2)(b)
(ii)(4) was inapplicable to the case of the petitioner.

Dismissing the Special Leave Petition, this Court,

Y HELD: 1. Having regard to the Motor Vehicles Act, 1939 as it G
stood prior to the amendments by Act 47 of 1982, the insurer was liable
to pay upto Rs.10,000 for each individual passenger where the vehicle
involved was a motor cab and upto Rs.5,000 ·for each individual passen-
ger in any other case. [1161F]

2.1 Section 95(2)(b) as it existed before its amendment in 1982 H

1149
1150 SUPREME COURT REPORTS [1987] 3 S.C.R.
).
A dealt with the limits of the liability of an insurer in the case of motor
vehicles in which passengers were carried for hire or reward or by
reason of or in pursuance of a contract of employment. [1155H; 1156A]

Sub-clause (i) of section 95(2)(b) provided that in respect of death
of or injury to persons other thai) passengers carried for hire or re-
B ward, a limit of Rs.50,000 in all was !he limit of the liability of the
insurer. [1156A]
j
Under sub-clause (ii) there were two specific limits on the liability
of the insurer in the case of motor vehicles carrying passengers. The
first limit related to the aggregate liability of the insurer in any one
accident. It was fixed at Rs.50,000 in all where the vehicle was
C registered to carry not more than,thirty passengers, at Rs. 75_,000 in all
where the vehicle was registered to carry more than thirty but not more
-
than sixty passengers and at Rs. f,00,000 in all where the vehicle was
registered to carry more than si~y passengers. The other limit was in
respect of each passenger, which provided that subject to the limits
D aforesaid as regards the aggrega\e liability, the liability extended up to
Rs.10,000 for each individual passenger where the vehicle was a motor
cab and Rs.5,000 for each individual passenger in any other case.
Neither of the two limits can he ignored. [1156B-D]

2.2 The limit prescribed ip section 95(2)(b)(ii)(4) cannot be said
E to be only the minimum liability prescribed by law. The amount
mentioned in that provision provides the maximum amount payable by
an insurer in respect of each pa~senger who has suffered on account of
....
an accident. This is a fair construction of section 95(2) of the Act as it
existed at the time when the accident took place. [1156E]

2.3 After the 1982 amendment the liability of the insurer in
F
respect of each individual pass~nger is Rs.15,000 as against Rs.10,000
in the case of each individual passenger where the vehicle was a motor
cab and Rs.5,000 for each individual passenger in other cases, prior to
the said amendment. This shows that Parliament never intended that
the aggregate liability of the insurer mentioned in sub-clauses (1), (2)
G and (3) of section 95(2)(b )(ii) would be the liability of the insurer even
when one passenger had died or suffered injury on account of an acci-
dent. Such liability was always further limited by sub·dause (4) of
section 95(2)(b)(ii). [1159F-G]

2.4 In the instant case, the vehicle in question being a bus carry-
H ing passengers for hire or reward re~istered to carry more than thirty
M.K. KUNHIMOHAMMED v. P.A. AHMEDKUTIY 1151

but not more than sixty passengers, the limit of the aggregate liability cf A
the insurer in any one accident was Rs. 75,000 and subject to the said
limit the liability in respect of each passenger was Rs.5,000. [1156D I

2.5 As the law stands today the insurer is liable to pay upto
)'Rs.15,000 in respect of death of any passenger or any injury caused to
him. Having regard to the large number of motor vehicle accidents B
which are taking place on roads and also to the fact that a large number
). of public service vehicles carrying passengers are involved in them,
limit of Rs.15,000 fixed in the case of each passenger appears Ill be still
meagre. [1159E; 1160E]

3. The following suggestions in respect of certain provisions of the C
Motor Vehicles Act are made for consideration of the Central
Government:.

(i) The limits of compensation in respect of death or permanent
disablement payable in the event of there being no proof of fault have
~ become unrealistic in view of inflationary pressures and consequent loss D
of purchasing power of the rupee. These limits should, therefore, be
raised adequately. [1162B·CJ

(ii) There is no justification for continuing the distinction bet-
.ween public service vehicles and other vehicles and also between passen-
, .,gers and third parties with regard to the liability of the insurer to pay E
... compensation. Even among the public service vehicles a distinction is
made between vehicles used as goods carriages and those used for car-
rying passengers. It may be considered whether it is necessary to COD·
-f tinue these distinctions and also whether the limits of liability of the
insurer should not be altered suitably. [1162D·EJ
F
(iii) Tbe society and the State which are responsible for a large
number of motor vehicles being put on road should carry also the
responsibility of protecting the interests of innocent victims of hit and
run motor accidents which are increasing in number. The amounts of
Rs.5,000 and Rs.1,000 provided as compensation in respect of death or
tgrievous hurt respectively appear to be highly inadequate. It may be
considered whether these figures should not be increased in an appro- G
priate manner. [1162F-GJ

(iv) The expression "legal representative" has not been defined
in the Act and it has led to serious doubts in the course of judicial
proceedings. It may be considered whether it would not be advisable to
define the said expression for purposes of making claims before Claims H
1152 SUPREME COURT REPORTS [1987] 3 S.C.R.

Tribunals where death has resulted from a motor vehicle accident in the
A
same way in which the English Law has been amended. [1163A-C]

Motor Owners Insurance Co.Ltd. v. Jadavji Keshavji Modi &
Ors., [1982] l SCR 560; Sheikhupura Transport Co. Ltd. v. Northern
India Transport Insurance Co., [1971] Supp. SCR 20; Manjusri Raha & 1
B Ors. etc. v. B.L. Gupta & Ors. etc., [1977] 2 SCR 944; P.B. Kader &
Ors. v. Thatchamma and Ors., AIR 1970 Kerala 241; K.R. Sivagami.
Proprietor, Rajendran Tourist v. Mahaboob Nisa Bi and others, [1981)
ACJ 399; Madras Motor and General Insurance Co. Ltd. by its succes-
sor: The United Fire and General Insurance Co. Ltd. and others v. V.P.
Balakrishnan and others, [1982] ACJ 460; New India Assurance Co.
Ltd. v. Mahmood Ahmad and others, [1984] ACJ 390; Shivahari Rama
c Tiloji and another v. Kashi Vishnu Agarwadekar and others, [1985]
ACJ 494; National Insurance Co. Ltd. v. Shanim Ahmad and others,
[1985) ACJ 749; Tara Pada Roy v. Dwijendra Nath Sen and others,
[1986) ACJ 299; Noor Mohammad and another v. Phoola Rani and
others, [1984] ACJ 518; Raghib Nasim and another v. Naseem Ahmad
D and others, [1986] ACJ 405 and Gujarat State Road Transport Corpo-
ration, Ahmedabad v. Ramanbhai Prabhatbhai and Another, [1987] 3
sec 234, referred to.
CIVIL APPELLATE JURISDICTION: Special Leave Petition
(Civil) No. 7534 of 1987.
E /~
From the Judgment and Order dated 4. 1I. 1986 of the Kerala ....
High Court in M.F.A. No. 64 of 1982.

E.M.S. Anam for the Petitioner.

F The Order of the Court was delivered by

VENKATARAMIAH, J. The petitioner was the owner of a bus
bearing No. KLD- 9327 which was being run as a stage carriage. On
24.7.1978 while the said bus was carrying passengers it met with an
accident and Saheeda, who was one of the passengers in the bus, died 'f
G as a consequence of the said accident. The accident took place, accord-
ing to the Motor Accidents Claims Tribunal, due to the negligence on
the part of the driver of the vehicle who had been employed by the
petitioner. The Tribunal found that the compensation payable by the
petitioner to the legal representatives of Saheeda was Rs.56,800. It,
however, held that the liability of the insurer to indemnify the petitioner
H was limited to Rs.5,000 as the policy specifically limited the insurer's
M.K. KUNHIMOHAMMED v. P.A. AHMEDKUTIY [VENKATARAMIAH,J.] 1153
,+
liability to what had been provided by section 95(2)(b )(ii)(2) and (4) of A
Motor Vehicles Act, 1939 (hereinafter referred to as 'the Act').
Aggrieved by the decision of the Tribunal the petitioner filed an
appeal before the High Court of Kerala. The said appeal was dismis-
sed. This petition is filed under Article 136 of the Constitution for
r special leave to appeal against the judgment of the High Court.
B
The contention of the petitioner before this Court is that the
i insurer was liable to indemnify the petitioner upto a limit of Rs.75,000
under section 95(2)(b )(ii)(2) of the Act and that the further limit
mentioned in section 95(2)(b)(ii)(4) of the Act was inapplicable to the
... case of the petitioner. The relevant part of section 95 of the Act during
the relevant time read as follows: c
1-
"95(2). Subject to the proviso to sub-section (1), a policy
of insurance shall cover any liability incurred in respect of
any one accident up to the following limits, namely-
D
(a) where the vehicle is a goods vehicle, a limit of
fifty thousand rupees in all, including the liabilities, if any,
arising under the Workmen's Compensation Act, 1923 (8
of 1923), in respect of the death of, or bodily injury to,
employees (other than the driver), not exceeding six in

~

,
- number, being carried in the vehicle;

(b) where the vehicle is a vehicle in which passengers
are carried for hire or reward or by reason of or in pur-
suance of a contract of employment,-
E

1
(i) in respect of persons other than passengers car- F
ried for hire or reward, a limit of fifty thousand rupees in
all;

(ii) in respect of passengers,-

(I) a limit of fifty thousand rupees in all where the G
vehicle is registered to carry not more than thirty passen-
gers;

(2) a limit of seventy-five thousand rupees in all
where the vehicle is registered to carry more than thirty but
not more than sixty passengers;
H
1154 SUPREME COURT REPORTS [1987] 3 S.C.R.

A (3) a limit of one lakh rupees in all where the vehicle
is registered to carry more than sixty passengers; and

(4) subject to the limits aforesaid, ten thousand
rupees for each individual passenger where the vehicle is a
motor cab, and five thousand rupees for each individual
B passenger in any other case;

(c) save as provided in clause (d), where the vehicle
j
is a vehicle of any other class, the amount of liability

c
incurred;

(d) irrespective of the class of the vehicle, a limit of ·
rupees two thousand in all in respect of damage to any
property of a third party.
-
,,

D Section 95 of the Act sets out the requirements of the policies of
insurance which must be taken by the owners of motor vehicles and the
limits of liabilities thereunder. A policy of insurance should subject to
the proviso to sub-section (1) of section 95 of the Act cover any liabi-
lity incurred in respect of any one accident upto the limits specified in
sub-section (2) of section 95 of the Act. Clause (a) of section 95(2) of
E the Act during the relevant time provided that where the vehicle was a
goods vehicle the policy should cover the liability upto Rs.50,000 in all
including the liabilities, if any, arising under the Workmen's Compen-
sation Act, 1923 in respect of death of or bodily injury to the workmen
(other than the driver) not exceeding six in number being carried in
the vehicle. This clause came up for consideration before this Court in
F Motor Owners Insurance Co. Ltd. v. Jadavji Keshavji Modi & Ors.,
[ 1982] 1 SCR 560. In that case this Court held that clause (a) of section
95(2) of the Act qualified the extent of the insurer's liability by the use
of the unambiguous expression "in all" and since that expression was
specially introduced by an amendment, it must be allowed its full play.
The legislature must be presumed to have intended what it had plainly
G said. But clause (a) did not stand alone and was not the only provision
to be considered for determining the outside limit of the insurer's
liability. It was necessary to give effect to the words 'any one accident'
which formed part in the opening part of sub-section (2) of section 95
of the Act. The Court, therefore, held that if more than one person
was injured during the course of the same transaction each one of the
H persons must be deemed to have met with an accident. Accordingly,
M.K. KUNHIMOHAMMED v. P.A. AHMEDKUTfY (VENKATARAMIAH, J.I 1155

the Court held that each of the persons who was entitled to claim A
compensation under clause (a) of sub-section (2) of section 95 of the
Act was entitled to 'claim a sum of Rs.50,000 which was the limit
prescribed by the said clause on the date on which the accident, refer-
red to in that case, occurred. The Court, however, distinguished the

t
decision of this Court in Sheikhupura Transport Co. Ltd. v. Northern B
India Transport Insurance Co., [1971) Supp. SCR 20 which was a case
in which clause (b) of sub-section (2) of section 95 of the Act had
arisen for consideration. In doing so the Court observed thus:

"The judgment of the Punjab High Court was
brought in appeal to this Court in Sheikhupura Transport
Co. Ltd. v. Northern India 'Transport Co. For reasons C
aforesaid, the judgment in that case is not an authority on
the interpretation of clause (a) of section 95(2). After set-
ting out the relevant provisions of section 95(2) at pages 24
and 25 of the Report, Hegde J. speaking for himself and
Jaganmohan Reddy, J. concluded:
D
'In the present case we are dealing with a vehicle in
which more than six passengers were allowed to be carried.
Hence the maximum liability imposed under section 95(2)
on the insurer is Rs.2,000 per passenger though the total
liability may go upto Rs.20,000.'
E
Towards the end of the judgment, it was observed
that reading the provision contained in sections 95 and 96
together ' .... it is clear that the statutory liability of the
insurer to indemnify the insured is as prescribed ins. 95(2).
Hence the High Court was right in its conclusion that the
liability of the insurer in the present case only extends upto F
Rs.2,000 each, in the case of Bachan Singh and Narinder
Nath.' In view of the limit on the insurer's liability in
respect of each passenger, the argument on the construc-
tion of the words 'any one accident' had no relevance and
was therefore neither made nor considered by the Court.
Different considerations may arise under clause (b), as G
amended by Act 56 of 1969, but we do not propose to make
any observations on that aspect of the matter, since it does
not directly arise before us."

Section 95(2)(b) as it existed before its amendment in 1982 dealt
with the limits of the liability of an insurer in the case of motor vehicles H
1156 SUPREME COURT REPORTS [1987] 3 S.C.R.

A in which passengers were carried for hire or reward or by reason of or

1
in pursuance of a contract of employment. Sub-clause (i) of section
95(2)(b) provided that in respect of death of or injury to persons other
than passengers carried for hire or reward a limit of Rs.50,000 in all
was the limit of the liability of the insurer. Sub-clause (ii) dealt with
the liability in respect of death of or injury to passengers. Under that
B sub-clause there were two specific limits on the liability of the insurer
in the case of motor vehicles carrying passengers. The first limit re-
lated to the aggregate liability of the insurer in any one accident. It was .
fixed at Rs.50,000 in all where the vehicle was registered to carry not
more than thirty passengers, at Rs.75,000 in all where the vehicle was
registered to carry more than thirty but not more than sixty passengers
and at Rs.1,00,000 in all where the vehicle was registered to carry
C more than sixty passengers. The said sub-clause proceeded to lay down ~
the other limit in respect of each passenger by providing that subject to
the limits aforesaid as regards the aggregate liability, the liability ex-
tended up to Rs.10,000 for each individual passenger where the vehi-
cle was a motor cab and Rs.5 ,000 for each individual passenger in any
D other case. Neither of the two limits can be ignored. In the present
case the vehicle in question being a bus carrying passengers for hire or >-'
reward registered to carry more than thirty but not more than sixty
passengers the limit of the aggregate liability of the insurer in any one
accident was Rs. 75,000 and subject to the said limit the liability in
respect of each individual passenger was Rs.5,000. We find it difficult
E to hold that the limit prescribed in section 95(2)(b)(ii)(4) was only the ~
minimum liability prescribed by.law. The amount mentioned in that
provision provides the maximum amount payable by an insurer in
respect of each passenger who has suffered on account of the accident.
This appears to us to be a fair construction of section 95(2) of the Act r
as it existed at the time when the accident took place. Our view
F receives support from at least two decisions of this Court.

In Sheikhupura Transport Co. Ltd. v. Northern India Transport
Insurance Co. (supra) the motor vehicle involved was a passenger bus.
On account of an accident which took place on account of the negli-
gence of the driver of the said vehicle two persons died on the spot.
G Their legal representatives claimed compensation before the Motor ·~
Accidents Claims Tribunal. The Tribunal found that the legal re-
presentatives of each of the two persons who had died on account of
the accident, were entitled to compensation of Rs.18,000 and directed
that the entire sum should be paid by the insurance company. On
appeal by the legal representatives as well as by the insurance com-
H pany the High Court enhanced the compensation payable to the legal
M.K. KUNHIMOHAMMED v. P.A. AHMEDKIJITY [VENKATARAMIAH, J.) 1157
·*-
representatives of each of the two deceased persons to Rs.36,000 and A
also allowed the appeal of the insurance company and limited its liabi-
lity to the tune of Rs.2,000 in respect of each of the two deceased
persons in accordance with section 95(2)(b) of the Act as it stood at the
relevant time which provided that where the vehicle was a vehicle in
y which passengers were carried for hire or reward or by reason of or in
pursuance of a contract of employment in respect of persons other B
than passengers carried for hire or reward, a limit of Rs.20,000 and in
.~. respect of passengers a limit of Rs.20,000 in all and Rs.2,000 in respect
of an individual passenger if the vehicle was registered to carry more
than six persons excluding the driver. The Court observed that since in
... the said case the vehicle was one in which more than six persons were
allowed to be carried the maximum liability imposed under section
95(2) of the Act on the insurer was Rs.2,000 per passenger though the
c
i,
total liability might go upto Rs.20,000 in a given case where large
number of persons had suffered on account of the accident. Accord-
ingly the Court affirmed the judgment of the- High Court insofar as the
question of the liability of the insurer was concerned.
D
...... Clause (b) of section 95(2) of the Act again came up for consi-
deration before this Court in Manjusri Raha & Ors. etc. v. B.L. Gupta
& Ors. etc. [1977) 2 SCR 944. In that case also the motor vehicle which
was involved in the accident was a bus carrying passengers on a route
in the State of Madhya Pradesh. The Court followed the decision in
the case of Sheikhupura Transport Co. Ltd. v. Northern India Trans- E
~ port Insurance Co., (supra) and limited the liability of the insurer to
.... Rs.2,000 as provided by the Act at that time. The Court found itself in
complete agreement with the observations made by the Kerala High
Court in P.B.Kader & Ors. v. Thatchamma and Ors., AIR 1970
'( Kerala 241, and approved the following observations made by the
Kerala High Court:
F
"It is sad that an Indian life should be so devalued by
an Indian law as to cost only Rs.2,000, apart from the fact
that the value of the Indian rupee has been eroded ar{d
Indian life has become dearer since the time the statute was
enacted, and the consciousness of the comforts and ameni-
ties of life in the Indian community has arisen, it wc>uld G
have been quite appropriate to revise this fossil figure of
Rs.2,000 per individual, involved in an accident, to make it
more realistic and humane, but that is a matter for the
legislature; and the observation that I have made is calcu-
lated to remind the law-makers that humanism is the basis
of law and justice." Ii
1158 SUPREME COURT REPORTS [1987] 3 S.C.R.

A The Court also suggested on its own that instead of limiting the
liability of the insurance companies to a specified sum of rupees as
representing the value of human life, the amount should be left to be
determined by a Court in the special circumstances of each case, even
in the case where p~ssenger vehicles were responsible for the incident.
Fazal Ali, J. who delivered the judgment in the above case further 1
B observed at pages 950-951 thus:

"While our Legislature has made laws to cover every possi-
j
ble situation, yet it is well nigh impossible to make provi-
sions for all kinds of situations. Nevertheless where the
social need of the hour requires that precious human lives
lost in motor accidents leaving a trail of economic disaster
c in the shape of their unprovided for families call for special
attention of the law makers to meet this social need by
providing for heavy and adequate compensation particu-
larly through insurance companies. It is true that while our
law makers are the best judges of the requirements of the
D society, yet it is indeed surprising that such an important
aspect of the matter has missed their attention. Our
country can ill-afford the loss of a precious life when we are
building a progressive society and if any person engaged in
industry, office, business or any other occup;tion dies, a
void is created which is bound to result in a serious set back
to the industry or occupation concerned. Apart from that I
E
the death of a worker creates a serious economic problem
for the family which he leaves behind. In these circums-
'
tances it is only just and fair that the Legislature should
make a suitable provision so as to pay adequate compensa-
tion by properly evaluating the precious life of a citizen in
its true perspective rather than devaluing human lives on
F
the basis of an artificial mathematical formula. It is com-
mon knowledge that where a passenger travelling by a
plane dies in an accident, he gets a compensation of
Rs. l,00,000 or like large sums, and yet when death comes
to him not through a plane but through a motor vehicle he
is entitled only to Rs.2,000. Does it indicate that the life of "f
G a passenger travelling by plane becomes more precious
merely because he has chosen a particular conveyance and
the value of his life is considerably reduced if he happens to
choose a conveyance of a lesser value like a motor vehicle?
Such an invidious distinction is absolutely shocking to any
judicial or social conscience and yet s. 95(2)(d) of the
H Motor Vehicles Act seems to suggest such a distinction. We
M.K. KUNHIMOHAMMEB v. P.A. AHM.EDKUITY [VENKATARAMIAH, J.] 1159

hope and trust that our law-makers will give serious atten- A
tion to this aspect of the matter and remove this serious
lacuna ins. 95(2)(d) of the Motor Vehicles Act."

These observations were quoted with approval by this Court in
the course of its judgment in Motor Owners Insurance Co. Ltd. v.
Jadavji Keshavji Modi & Ors., (supra) and while doing so the Court B
observed that the above observations were still languishing in the cold.
storage of pious wishes. Immediately after the decision in the Motor
Owners Insurance Co. Ltd. v. Jadavji Keshavji Modi & Ors. (supra)
Parliament took steps to amend sub-clause (ii) of clause (b) of section
95(2) of the Act by Act 47 of 1982. After the said amendment sub-
clause (ii) of clause (b) of section 95(2) of the Act reads thus:
c
"95(2)(b ). Where the vehiele is a vehicle in which passen-
gers are carried for hire or reward of by reason of or in
pursuance of a contract of employment-

D
(ii) in respect of passengers, a limit of fifteen
thousand rupees for each individual passenger.
"

As the law stands today the insurer is liable to pay upto Rs. 15,000
·-""· in respect of death of any passenger or any injury caused to him. In the E
Statement of Objects and Reasons attached to the Bill which ultima-
tely became Act 47 of 1982 it was stated that the limit with respect to
an insurer's liability to a passenger involved in an accident in a public
1,' service vehicle was being fixed at Rs.15,000. After the above amend-
ment, which was inteJded to increase the liability of the insurer,
instead of Rs.10,000 in the case of each individual passenger where the F
vehicle was a motor cab and Rs.5:ooo for each individual passenger in
other cases which were the limits in force immediately prior to the said
amendment the liability in respect of an individual passenger is now
raised to Rs.15,000. This clearly demonstrates that Parliament never
.,.., intended that the aggregate liability of the insurer mentioned in sub-
clauses (1), (2) and (3) of section 95(2)(b)(ii) of the Act would be the G
liability of the insurer even when one passenger had died or suffered
injury on account of an accident. Such liability was always further
limited by sub-clause (4) of section 95(2){b)(ii) of the Act. Even in the
latest Bill, i.e., Bill No. 56 of 1987 which was introduced in the Lok
Sabha on the 11th of May, 1987 for the purpose of consolidating and
amending the law in regard to the motor vehicles it is proposed by H
1160 SUPREME COURT REPORTS [1987] 3 S.C.R.

A section 147 to retain the provision regarding the limit of the insurer's
liability in respect of vehicles in which passengers are carried for hire
or reward or by reason of or in pursuance of a contract of employment
as it was provided by Act 47 of 1982. Section 147(2)(b )(ii) of the Bill
reads thus:

B "147(2). Subject to the proviso to sub-section ( 1), a
policy of insurance shall cover any liability incurred in res-
pect of any one accident up to the following limits,
namely:-

(b) where the vehicle is a vehicle in which passengers
c are carried for hire or, reward or by reason of or in I
pursuance of a contract of employment;-

(ii) in respect of passengers, a limit of fifteen
D thousand, rupees for each individual passenger, )>-

Having regard to the large number of motor vehicles accidents
which are taking place on roads and also to the fact that a large number
of public service vehicles carrying passengers are involved in them, w.e
E are of the view that the limit of Rs.15,000 fixed in the case of each ~
passenger appears to be still meagre and we hope that Parliament
while enacting the Bill into law would take steps to increase the
insurer's liability keeping in view the need for providing for adequate
compensation as a measure of social security. 1

F We should at this stage state that the High Court of Madras in
K. R. Sivagami, Proprietor, Rajendran Tourist v. Mahaboob Nisa Bi
and Others, [1981] ACJ 339 has taken the same view as regards the
effect of section 95(2)(b )(ii) of the Act as it stood before its amend-
ment in 1982. It has observed that the said provision specifically
provided for two limitations on the liability of the insurer in respect of
G an accident in which a vehicle carrying passengers was involved, the ~
first limitation being the limitation contained in sub-clauses (1), (2)
and (3) of section 95(2)(b )(ii) which provided that for the aggregate
liability of the insurer in an accident and the second limitation being
the one contained in sub-clause (4) of section 95(2)(b)(ii) which
provided that subject to the limits aforesaid Rs.10,000 for each
H individual passenger where the vehicle was a motor cab and Rs.5,000
M.K. KUNHIMOHAMMED v. P.A. AHMEDKUTIY (VENKATARAMIAH,J.] 1161

for each individual passenger in any other case. Khalid, J., as he then A
was, of the Kerala High Court has also nccepted the same construction
of section 95(2)(b) in Madras Motor and General Insurance Co. Ltd.
by its successor: The United Fire and General Insurance Co. Ltd. and
others v. V.P. Balakrishnan and others., [1982) ACJ 460.
B
The High Court of Allahabad in New India Assurance Co. Ltd.
< v. Mahmood Ahmad and others, [1984) ACJ 390 the High Court of
} Bombay in Shivahari Rama Tiloji and another v. Kashi Vishnu
Agarwadekar and others, [ 1985) ACJ 494 and the High Court of Patna
in National Insurance Co. Ltd. v. Shanim Ahmad and others, [1985)
ACJ 749 and in Tara Pada Roy v. Dwijendra Nath Sen and others,
[ 1986] ACJ 299 have overlooked the cumulative effect of sub-clauses c
1_ ( 1), (2) and (3) and of sub-clause (4) of section 95(2)(b )(ii) of the Act.
They have failed to give effect to section 95(2)(b)(ii)(4) of the Act. We
are of the view that these decisions do not lay down the correct view.
We m_ay, however, state here that in Noor Mohammad and another v.
Phoola Rani and others, [1984) ACJ 518 and in Raghib Nasim and
~ another v. Naseem Ahmed and others, [ 1986) ACJ 405 two Division
D
Benches of the Allahabad High Court have construed the provision in
question as we have done in this case. The decision of the Single Judge
of the Allahabad High Court in New India Assurance Co. Ltd. v.
Mahmood Ahmad and others, (supra) is dissented from in the later
decision of the Division Bench of the Allahabad High Court in Raghib

- . JNasim and another v. Naseem Ahmad and others, (supra).

Having regard to the statute as it stood prior to the amendments
by Act 47 of 1982 we hold that the insurer was liable to pay uptu
-( Rs.10,000 for each individual passenger where the vehicle involved
was a motor cab and upto Rs.5 ,000 for each individual passenger in
E

any other case. The judgment of the Kerala High Court against which F
this petition is filed has followed the above construction. We do not
find any ground to interfere with it. This petition is, therefore,
dismissed.

In the end we propose to make a few suggestions to the Central
)-Government in respect of certain provisions in Chapters X, XI and XII G
of the Motor Vehicles Bill No. 56 of 1987 now pending before Parlia-
ment which relate to the liability without fault in certain cases, insur-
ance of motor vehicles against third party risks and Claims Tribunals.
Sections 140, 147, 161 and 166 in the Motor Vehicles Bill No. 56 of
1987 correspond to sections 92A, 95, 109A and HOA of the present
Act. The Bill does not propose to introduce any change in sections H
1162 SUPREME COURT REPORTS [1987] 3 S.C.R.

140, 147, 161 and 166 of the Bill from what the law is today. They are
A
almost identical with the existing provisions. In section 140 of the Bill
which corresponds to section 92A of the Act the liability to pay
compensation in the case of death of any person or in the case of
permanent disablement of any person is proposed to be retained at
Rs.15,000 and Rs.7,500 respectively in the same way in which the law
1
B stands today. Having regard to the inflationary pressures and the con-
sequent loss of purchasing power of the rupee we feel that the amount
of Rs.15,000 and the amount of Rs.7,500 in the above provisions ·:{
appear to have become unrealistic. We, therefore, suggest that the
limits of compensation in respect of death and in respect of permanent
disablement, payable in the event of there being no proof of fault,
. should be raised adequately to meet the current situation. Section 147
C in the Bill corresponds to section 95 of the present Act. Here again the )-
Government may consider whether it is necessary to continue the dis-
tinction between public service vehicles and other motor vehicles in
regard to the liability of the insurer to pay compensation. We also do
not find any justification for continuing the distinction between the
D liability of the insurer to pay compensation to passengers and the
liability of the insurer to pay compensation to other third parties under ).-
the said provisions. Even among the public service vehicles a distinc-
tion is made in the said provisions between vehicles used as goods
carriages and vehicles used for the purpose of carrying passmgers. The
Central Government may consider whether the limits of liability of the.
E insurer now incorporated in section 147 of the Bill should not b~
altered suitably. Section 161 in the Bill corresponds to section 109A of
the present Act which makes special provisions as to compensation
payable in cases of hit and run motor accidents. This proviSion pro-
vides for payment of Rs.5,000 in respect of death of any person result- ~
ing from a hit and run motor accident and for the payment of Rs. l,000
in respect of grievous injury to a person from a hit and run motor
F
accident. It is a matter of common knowledge that hit and run motor
accidents are increasing in number. The society and the State which
are responsible for such large number of motor vehicles being put on
road should carry also the responsibility of protecting the interests of
the innocent victims of hit and run motor accidents. A sum of Rs.5,000
G and a sum of Rs. J,000 provided as compensation in respect of death~
grievous hurt respectively appear to be highly inadequate. The
Government may consider whether these figures should not be
increased in an appropriate manner. Lastly we come to section 166 of
the Bill which corresponds to section I JOA of the present Act. This
contains the provisions relating to application for compensation to be
filed before Claims Tribunals. It is stated therein that where death has
H resulted from the accident an application for compensation may be
M.K. KUNHIMOHAMMED v. P.A. AHMEDKUTIY (VENKATARAMIAH, J.] 1163
~
made by all or any of the legal representatives of the deceased. The A
expression 'legal representative' has not been defined in the Act and it
has led to serious doubts in the course of judicial proceedings. Atten-
tion of the Government is drawn to the decision of this Court in
Gujarat State Road Transport Corporation, Ahmedabad v. Ramanbhai
'f Prabhatbhai and Another, [1987) 3 SCC 234 and the reference made in
the said decision to the Report of the English Royal Commission on B
Civil Liberty and Compensation for Personal Injury under the
)· Chairmanship of Lord Pearson. The Government may consider
whether it would not be advisable to define the expression 'legal

... representative' for purposes of making claims before Claims Tribunal
where death had resulted from a motor vehicle accident in the same
way in which the English Law has been amended. Since the Bill is on c
i the anvil of Parliament we feel that this is the appropriate time for the
Central Government to reconsider the above issues. A copy of this
Order may be sent to the Secretary to the Government of India,
Ministry of Transport, for information.

N.P.V. Petition dismissed. D
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