The Supreme Court ruled that an insurer’s contractual liability under a personal accident cover is distinct from its statutory third-party liability. The defense of “limited liability” must be specifically pleaded and proved before the Tribunal; it cannot be raised for the first time in appeal. The insurer was thus liable to pay the full compensation awarded.
Facts Of The Case:
The deceased, who was the brother of the car owner, was driving the vehicle when its right rear tyre suddenly burst. This caused the car to go out of control, topple, and resulted in a fatal head injury that led to his death. The car was also occupied by the owner, his wife, and the deceased’s wife, all of whom sustained injuries. The claimants, the deceased’s widow, minor children, and parents, filed for compensation. The Motor Accidents Claims Tribunal awarded approximately ₹25.82 lakhs, rejecting the insurer’s allegations of driver negligence and lack of a valid license, and noting a comprehensive policy with a personal accident cover was in effect. The insurance company appealed to the High Court, which drastically reduced the liability to ₹2 lakhs. The High Court based this on its interpretation of the insurance policy and Indian Motor Tariffs, finding the personal accident cover for the owner-driver was limited to that amount. The claimants then appealed to the Supreme Court, arguing the limited liability defense was never pleaded or proved by the insurer in the original tribunal proceedings.
Procedural History:
The claimants initially filed for compensation before the Motor Accidents Claims Tribunal, which awarded them approximately ₹25.82 lakhs. The insurance company appealed this decision to the High Court. The High Court allowed the appeal in part, setting aside the Tribunal’s award and limiting the insurer’s liability to only ₹2 lakhs based on its interpretation of the insurance policy. Aggrieved by this reduction, the claimants filed a Special Leave Petition (SLP(C) No.5885 of 2019) in the Supreme Court of India. The Supreme Court, after granting leave and hearing the civil appeal, set aside the High Court’s judgment and restored the full award granted by the Tribunal.
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Court Observation:
The Supreme Court observed that the insurer’s defense of a “limited liability” under the personal accident cover was a factual contention that was never specifically pleaded in its written statement before the Tribunal, nor raised in the memorandum of appeal before the High Court. The Court emphasized the fundamental legal principle that a plea not taken in the pleadings cannot be entertained for the first time at the appellate stage. Consequently, the High Court erred in suo motu examining the policy document and the Indian Motor Tariffs to introduce and decide upon this unpleaded defense. The insurer was thus precluded from raising this new argument to restrict its contractual liability
Final Decision & Judgement:
Case Details:
Case Title: Manjusha & Ors. vs United India Assurance Company Limited & Anr. Case Number: (@Special Leave Petition (C) No. 5885 of 2019) Date of Judgement: July 25, 2025 Judges/Justice Name: Justice Sudhanshu Dhulia and Justice K. Vinod Chandran
Download The Judgement Here