NEW INDIA ASSURANCE CO LTD Vs. DEEPIKA

JUDGEMENT

(1.) THE file is taken up today as an application (CM. APPL No.9054/2012) has been moved by the Respondents No.1 to 3 for withdrawal of the amount. However, the learned counsel for the parties submit that it is a short matter and the Appeal can be disposed of today itself. THE Appeal is thus taken for final disposal.

(2.) THE Appellant New India Assurance Co. Ltd. impugns a judgment dated 20.10.2011 whereby a compensation of RS.29,31,900/- was awarded in favour of the Respondents No.1 to 3 for the death of Golty Saluja who died in an accident which occurred on 24.02.2011.

(3.) THE Appeal filed by the Appellant on these grounds is mis- conceived. THE issue of satisfying the third party liability even in a case of breach of the terms of insurance policy is settled by the three Judge Bench report in Sohan Lal Passi v. P. Sesh Reddy, (1996) 5 SCC 21 and National Insurance Company Limited v. Swaran Singh & Ors., (2004) 3 SCC 297. As per Section 149(2) of the Motor Vehicles Act (the Act), an insurer is entitled to defend the action on the grounds as mentioned under Section 149(2)(a)(i)(ii) of the Act. Thus, the onus is on the insurer to prove that there is breach of the condition of the policy. It is well settled that the breach must be conscious and willful. Even if a conscious breach on the part of the insured is established, still the insurer has a statutory liability to pay the compensation to the third party and will simply have the right to recover the same from the insured/tortfeasor either in the same proceedings or by independent proceedings as the case may be, as ordered by the Claims Tribunal or the Court. THE question of statutory liability to pay the compensation was discussed in detail by a two Judge Bench of the Supreme Court in Skandia Insurance Company Limited v. Kokilaben Chandravadan, (1987) 2 SCC 654 where it was held that exclusion clause in the contract of Insurance must be read down being in conflict with the main statutory provision enacted for protection of victim of accidents. It was laid down that the victim would be entitled to recover the compensation from the insurer irrespective of the breach of the condition of policy. THE three Judge Bench of the Supreme Court in Sohan Lal Passi(supra) analyzed the corresponding provision under the Motor Vehicles Act, 1939 and the Motor Vehicles Act, 1988 and approved the decision in Skandia (supra). In New India Assurance Co., Shimla v. Kamla and Ors., (2001) 4 SCC 342, the Supreme Court referred to the decision of the two Judge Bench in Skandia(supra), the three Judge Bench decision in Sohan Lal Passi(supra) and held that the insurer who has been made liable to pay the compensation to third parties on account of certificate of insurance issued, shall be entitled to recover the same if there was any breach of the policy condition on account of the vehicle being driven without a valid driving licence. THE relevant portion of the report is extracted hereunder: