Oriental Insurance Co. Ltd. v. Smt. Raj Kumari and Ors.

submitted that having held that the liability of the insurance company was limited to Rs.50;000/-, the High Court was not justified in directing payment of the entire amount by it and to recover the differential amount. 5. There is no appearance on behalf of the respondents. 6. It would be appropriate t9 take a note of what was held by the Constitution Berich of this Court in New India Assurance Co. Ltd v. CM Jaya and Ors., [2002] 2 SCC 278. In that case it was held, inter alia, as follows: "In the circumstances, we hold that the liability of the appellant, insurance-company is limited to Rs.50,000/-, as held by the Tribunal. In the view we have taken, it is unnecessary to go into the question relating to either maintaiiiability of cross­ objections before the High Cot.lrt against the appellant alone or E as to the enhancement of compensation when the owner and driver have not filed appeal against the impugned judgment." 7. The questions that were considered by the Constitution Bench are as follows: F "The question involved in these appeals is whether in a case of insurance policy not taking any higher liability by accepting a higher premium, in case of payment of compensation to a third party, the insurer would be liable t~ the extent limited under Section 95(2) or the insurer would be liable to pay the entire G amount and he may ultimately recover from the insured. On this question, there appears to be some apparent conflict in the two three-Judge Bench decision of this Court - (1) New India Assurance Co. Ltd v. Shanti Bai, [1995] 2 SCC 539 and (2) Amrit Lal Soodv. Kaushalya Devi Thapar [1998] 3 SCC 744. H A 2. In the latter decision, unfortunately the decision in New Jncfia Assurance case (supra) has not been noticed though reference has been made to the decision of this Court in National Insurance Co. Ltd. V. Jugal Kishore, [1998] 1 sec 626, which was relied upon in the earlier three-Judge Bench Judgment. In view of the B apparent conflict in these two three-Judge Bench decisions, we think it appropriate that the records of this case may be placed before my Lord, the Chief Justice of India to constitute a larger Bench for resolving the conflict. We accordingly so direct. The record may now be placed before the Hon'ble the Chief Justice c of India" 8. It would be evident from the conclusions of this Court the liability of the insurance company would in the instant case be limited to quantum which was to be indemnified in terms of the policy. The Tribunal and the High Court have held accordingly. 9. In Oriental Insurance Co. Ltd. v. Shakuntala Garg and Ors., (Civil Appeal No. 104of2000, disposed of on 10.1.2003), it was held as follows: "Learned counsel for the appellant at this stage expressed an apprehension that by virtue of the terms of the Award, the appellant may be required to pay the entire amount and recover it from the owner. In the light of the modification of the impugned Award, such question does not arise." 10. It is true that in certain cases this Court has, after looking into the fact situation, directed the insurance company to make payment with liberty to recover the amount in excess of the liability from the insured. Those decisions were given on the facts situation of the cases concerned. 11. Reliance on the decision without looking into the factual G background of the case before it is clearly impermissible. A decision is a precedent on its own facts. Each case presents its own features. It is not everything said by a Judge while giving a judgment that constitutes a precedent. The only thing in a Judge's decision binding a party is the principle upon which the case is decided and for this reason it is important ' ORIENTALINSURANCECO.LTD.v. RAJKUMARI 1147 [PASAYAT,J.] to analyse a decision and isolate from it the ratio decidendi. According A to the well-settled theory of precedents, every decision contains three basic postulates - (i) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct, or perceptible facts; (ii) statements of the principles of law ~ applicable to the legal problems disclosed by the facts; and (iii) judgment B based on the combined effect of the above. A decision is an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically flows from the various observations made in the judgment. The enunciation of the reason or principle on which a question before a Court has been C decided is alone binding as a precedent. (See: State of Orissa v. Sudhansu Sekhar A1isra and Ors., AIR (1968) SC 647 and Union of India and Ors. V. Dhanwanti Devi and Ors., [1996] 6 sec 44). A case is a precedent and binding for what it explicitly decides and no more. The words used by Judges in their judgments are not to be read as if D they are words in Act of Parliament. In Quinn v. Leathern, (1901) AC 495 (H.L.), Earl ofHalsbury LC observed that every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which are found there are not intended to be exposition of the whole law but governed and qualified E by the particular facts of tl1e case in which such expressions are found and a case is only an autl1ority for what it actually decides. 12. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be F read as Euclid's theorems nor as provisions of the statute and that too -taken out of their context. These observations must be read in tl1e context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy G discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd v. Horton, (1951) AC 737 at p.761, Lord Mac Dermot observed: H "Tu~ w.~~~r ~~9t, of co.ll!:s~,. ~e s~We~, m~r~ly. by. treat_i,i;ig \he ipsi.ssima vertra of Wines, J as thou~ they' were paq <?fan Act of Parl.iament ~d applying then.des ofinterf>reta~ion. apprgpri~~e th~reto. This is n~t to ~et;rac~ from. \he gr~~ weigl).t ~o ~~ giyen ~9 the language actually used by that most distingltjshedjudge." , • .. _ r• , • ~ . , ' . • - ' I '\. I ..i.. • \ 'J. ll • .0 1 ... .. -1 • i "'"~ ~ L 13. In Home Office v. Dorset Yacht Co., (1970) 2 AH ER 294 Lord Reid said, "Lord Atkin' s speech .... .is not to be treated as if it was a stattite d~ficition. It will require qualificatio~ in ~ew ci~cwpstances.;' Megarry, J in(i971) 1WLR1062 observed: "One must not, of course, construe even a reserved judgment ofR~~ell L~i as ifit·~~re M.Act~f C Parlia:i:ne~t." ~d, i~ He~rington v. Brtti~h.Rail~ays 13oa~d, (1972) '2 WLR 537 Lord Morris said: ' .. '. . ' · . D. "There is always peril in treating the w9rds <?fa speech 9r judgment as though they are words in a legislative ~na~tmen~ ~~. it is to be remembered that judicial utterances made in the setting <?fthe facts or'a particular ca~e." . . ... ' . . . . . 1,4. Cifc~tial fle,gbility, one additional or 9ifferent fact rpay make a world_9f differen~ benyeen c;onclU$ions in two,<;ases. Dispo~, of cases bx bJ!!:19ly pl~~ing reliap.~e. on a dec;ision is. not pr<;>per. 15. The following words of Lord De~g in the matter of applyipg precedents have bec~me locus classic~s: . . . . . . . . n • ' • • • . • . ~ \,._ \ ' ' . ' ... ':E~~!i, ca~~ dyp~~4s. on its. 9wn facts ~d a close similarity ~et\y~eq. 9pe case and another is llQt enol!gh ~caµse e~en; a. single sjgriifj.£m.1t, ~etail max alter the entji:e as~t, ip. deciding sµ9h cases, 9p.e shRuld avoid· the temptation to. decide cases (as said-by <:;qrdozo) by matching the colour of <:me.case againsJ th~ col9ur of another. To decide therefore, on.which side.oftne.line a case ~···" •' .. . ..,.~,~.~-'·' .,,,_' ~ falls, the,broad resemblance to another.caseis not-at all decisive." '.ltl • • ~· ... , • I~ ~.-·.~· :ao.·~.._ ... , ... ~;. "''-•' "K't *** *** *** "Precedent s!iould be fol~qwed:only so,far.~.it·tp.i:!f~ t4~:pa~ of justice, b~t you must cut the.dead·w9od <l!l~:trim off tr~ sJcie, branches else.you \\jll find. yours~lt:l9st:in th!~~!tt.s;,~n~; ~~ch~s. ORIENTALINSURANCECO.LTD. v. RAJKUMARI 1149 [PASAYAT,J.] My plea is to keep the path to justice clear of obstructions which A could impede it." 16. In the instant case the insured was a private limited company doing transport business. There was no material placed before the High Court to show that the claimants would have any difficulty in recovering B the awarded amount from it. That being so, the High Court's order is modified to the extent that the insurer shall pay an amount of Rs. 50,000/-with interest awarded to claimants. The balance has to be paid by the insured. 17. Another point urged before this Court in support of the appeal C was that the rate of interest is high. The liability of the insurance company is limited to Rs.50,000/-with interest@ 9% p.a. from the date of the application. The rate is being fixed considering the date of accident. The insured shall forthwith make payment of the balance amount with interest to the claimants and in any event not later than 3 months from the date of D this order. 18. The appeal is allowed to the aforesaid extent with no order as to costs. D.G. Appeal partly allowed. E