CMA/1031/1996 of NATIONAL INSURANCE CO LTD Vs SAMIYATHAL on 31 December 2002

:JUDGMENT

(Judgment of the Court was made by P. Sathasivam, J.)

Aggrieved by the award of the Motor Accident Claims Tribunal (Principal Subordinate Judge), Erode, dated 31-01-1996 made in M.C.O.P.No. 336 of 1992,National Insurance Company Limited, Bhavani has preferred the above appeal.

2. In respect of death of one Karuppanna Gounder in a motor accident thattook place on 04-12-1988, his widow and children preferred a claim forRs.2,00,000/-. Before the Tribunal, the first claimant, widow of the deceasedgot herself examined as P.W.1 and she also examined two more witnesses asP.Ws.2 and 3, besides marking documents as Exs. P-1 to P-7 in support oftheir claim for compensation. On the side of the Insurance Company, theirofficer was examined as R. W.1 and documents were marked as Exs.R-1 to R-5.The Tribunal, on appreciation of the evidence, both oral and documentary,after holding that the accident was caused due to negligence on the part ofthe driver of the lorry, passed an award for Rs.1,61,000/- and directed theInsurance company/appellant herein to settle the same. Questioning itsliability, the Insurance company has preferred the present appeal.

3. Heard the learned counsel for the appellant as well as respondents.

4. Mr. S. Arunkumar, learned counsel for the appellant/ Insurance company,by pointing out the fact that the driver was not having a valid drivinglicence to drive a lorry on the date of the accident, would contend that theTribunal committed an error in passing the award against the Insurancecompany. He also contended that, in any event, since the statutory liabilityis restricted to the extent of Rs.1,50,000/-, the direction of the Tribunalfastening the entire liability namely Rs.1,61,000/- on them (Insurancecompany) cannot be sustained.

5. In the light of the limited question raised by the appellant/Insurancecompany, it is unnecessary for us to consider the findings with regard to thenegligence and the quantum of compensation arrived at by the Tribunal.

6. With regard to the first contention that the driver was not possessed of avalid driving licence to drive the lorry, as rightly observed by the Tribunal,it is the Insurance Company to substantiate their plea by placing necessarymaterials that the driver was not having a valid driving licence on the dateof the accident. In the counter statement, the Insurance Company has taken aplea that the driver was not having a valid licence to drive lorry. Insupport of their plea, the Insurance company has examined one Benchamin, anofficer working in the Regional Office as R.W.1. He deposed before the Courtthat the lorry belonged to the second respondent/6th respondent herein. Thesaid lorry was insured with their company and there was a valid policy for theperiod from 11-1-88 to 10-1-1989. A copy of the insurance policy has beenmarked as Ex.R-1. He admitted that as per the policy their liability to thirdparties is limited to Rs.1,50,000/-, for which the owner has paid a premium ofRs.240/-. He also deposed that no additional premium has been paid forunlimited liability. According to him, on the date of the accident, the lorrydriverKandasamy/5th respondent herein was not having a valid licence to drivelorry. He further deposed that he (driver) was charge-sheeted for the same.According to him, their company had sent a notice-Ex.R-2 on 12-01-95 to thedriver-Kandasamy to produce his driving licence. Ex.R-2 was returnedun-served, and the returned cover has been marked as Ex.R-3. The insurance

company had also sent a similar notice dated 29-5-95 to the owner of thelorry-Chinnasamy informing him about the non-production of driving licence bythe driver and the violation of Motor Vehicles Act and policy conditions, andthe same has been marked as Ex. R-4. Since the owner refused to receive theregistered notice, the same was returned and the returned cover has beenmarked as Ex. R-5. It is true that R.W.1 has admitted that the Insurancecompany had not taken steps to ascertain from the Regional Transport Office,whether the lorry driver was issued with a driving licence to drive vehiclelike lorry. Here, we have to note that after taking the stand in the counterstatement that the driver was not possessed with a valid driving licence todrive a lorry, the insurance company has sent registered legal notices to thedriver as well as the owner of the lorry. It is also brought to our noticethat both the notices were returned un-served. As a matter of fact, theverification of the cover addressed to the owner, shows that he refused toreceive the same. These materials would show that the insurance company hadtaken necessary steps to ascertain the fact whether the driver was having avalid driving licence or not? It is not either clear or explained as to whythe driver and the owner did not respond to the notice issued by the insurancecompany. Likewise, they could have appeared before the Tribunal and informedtheir stand. Howeve r, before this Court, the owner of the lorry isrepresented by a counsel. Even before us, there is no explanation orinformation regarding the stand taken by the insurance company, namely,whether the driver was having a valid licence at the time of the accident todrive a lorry. In such a circumstance, as rightly contended by the learnedcounsel for the appellant/insurance company, though the appellant haddischarged the initial responsibility in proving the fact that the driver ofthe vehicle had no valid driving licence, the said fact had not beendischarged either by the claimants or by the owner of the vehicle. However,as observed by the Hon'ble Supreme Court in NEW INDIA ASSURANCE CO. LTD., v.KAMLA, reported in 2001 ACJ 843, the insurance company is liable to pay to thethird parties irrespective of the fact that there has been any breach ofviolation of the policy conditions. In the event that there is abreach/violation of the policy conditions, the insurance company can recoverfrom the insured the amount so paid to the third parties, if as per the policyconditions, the insurer had no liability to pay such sum. The Tribunal, byrelying on the very same judgment, rightly directed the insurance company topay the compensation amount to the claimants. However, the grievance of theappellant is that the Tribunal has not issued any direction to the InsuranceCompany to recover the amount from the insured. In 2001 ACJ 843 (citedsupra), the Supreme Court issued a direction to the Claims Tribunal to decidethe question whether the insurance company is entitled to recover the amountfrom the owner of the vehicle on account of the vehicle being driven by aperson who had no valid licence to drive the vehicle after affordingopportunity to all the parties concerned. Learned counsel for the appellanthas also relied on a Division Bench decision of this Court rendered inC.M.A.No.627 of 1999 dated 03-08-2001 (M/S. NATIONAL INSURANCE CO., LTD., v.SAKTHI AND OTHERS) (P. Sathasivam and A. Subbulakshmy, JJ). Before theDivision Bench similar question was raised by the appellant/insurance company.After referring to the decision of the Supreme Court in NEW INDIA ASSURANCECOMPANY, SHIMLA v. KAMLA AND OTHERS (2001 ACJ 843), the Division Bench hasheld that, "the insurer and the insured are bound by the conditions enumerated

in the policy and the insurer is not liable to the insured, if there isviolation of any policy condition". The Division Bench has also held that"the insurer who is made statutorily liable to pay compensation to thirdparties on account of the certificate of insurance issued shall be entitled torecover from the insured the amount paid to third parties, if there was anybreach or violation of the policy condition on account of the vehicle beingdriven without a valid licence." We are in respectful agreement with the aboveview. In the present case, we have already referred to the specific standtaken by the insurance company in their counter statement, the evidence ofR.W.1, their officer, Exs. R-1 to R-5, and the conduct of the driver and theowner in not responding to the request of the insurance company for productionof valid licence to drive a lorry. Accordingly, as observed by the SupremeCourt in 2001 ACJ 843 (cited supra), we hold that the insurance company isliable to pay compensation to the claimantsrespondents 1 to 4 herein and onaccount of violation/breach of terms of insurance policy, namely, the lorrybeing driven without a valid licence, the appellant/insurance company isentitled to recover from the insured.

7. Learned counsel appearing for the appellant by drawing our attention to aDivision Bench decision of this Court in KUMAR (MINOR) etc., v. NATIONALINSURANCE CO. LTD., reported in 2002-4-L.W. 691, would contend that if theinsurance company is liable to pay compensation to third parties in respect ofbreach of policy conditions, a further direction may be issued to proceedagainst the owner by way of execution of the award. The Division Bench insimilar situation namely that the vehicle which was involved in the accidentdriven by a person who did not have a licence for driving heavy goods vehicle,passed a decree in favour of the insurer and against the owner for the amountwhich the insurer had already deposited and permitted the insurer to executethe same (decree) against the owner of the vehicle. This is clear from para10 of their judgment. Following the same, it is made clear that if theinsurance company had deposited the entire amount of compensation, whichamount is now being permitted to be withdrawn by the claimants subject to para10, it is open to the insurer to execute the same as a decree against theowner of the vehicle.

9. Now coming to the second contention, the learned counsel for theappellant/Insurance company, by drawing our attention to the fact that interms of the insurance policy-Ex.R-1, their liability to third parties islimited to Rs.1,50,000/-, contended that the direction of the Tribunal tosatisfy the entire award namely Rs.1,61,000 /- is liable to be set aside.Here again, as rightly contended, since the owner has paid a premium ofRs.240/-, the statutory liability of the insurance company is limited toRs.1,50,000/- in so far as third parties are concerned. We have alreadyreferred to the evidence of R.W.1, an officer of the insurance company thatthe owner had not paid additional amount/premium for unlimited liability tothe third parties. In such a circumstance, we hold that the liability of theinsurance company is limited to Rs.1,50,000/- and the claimants are entitledto recover the balance amount i.e., Rs.11,000/- with corresponding interestfrom the owner by way of execution of the award.

10. In modification of the award of the Tribunal, we pass the following order:

(i) As per the terms of the policy, the appellant/insurance company is liableto pay to the claimants/respondents 1 to 4 herein, being the third parties,the statutory amount of Rs.1,50,000/- with interest as awarded by theTribunal;

(ii) Since there is a breach of terms of insurance policy, theappellant-insurance company is entitled to recover the said amount ofRs.1,50,000/- from the owner of the lorry namely Chinnasamy-6th respondentherein by filing an execution petition before the Tribunal.

(iii) The claimants are permitted to proceed against the owner-Chinnasamy/6threspondent herein in so far as the balance amount of Rs.11,000/- with interestas awarded by the Tribunal by filing an execution petition;

(iv) The claimants are also permitted to withdraw the amount as apportioned bythe Tribunal (as per clause 4 of the decree).

Civil Miscellaneous Appeal is allowed to the extent mentioned above. Nocosts.

R.B.

Index:- YesInternet:- Yes.To-1) The Motor Accidents Claims Tribunal( Prl.SubordinateJudge), Erode (with records).

2) The Section Officer, V.R. Section, High Court,Madras.