NATIONAL INSURANCE CO LTD Vs. VIJAY RAI

JUDGEMENT

(1.) THE Appellant/National Insurance Company Limited impugns a judgment dated 02.04.2012 passed by the Motor Accident Claims Tribunal whereby a compensation of RS.3,75,000/- was granted for the death of a minor ( a boy aged four years). On the basis of judgment of the Supreme Court in R.K.Malik v. Kiran Pal 2009(8) Scale 451 and the judgment of this Court in National Insurance Company Limited v. Farzana & Ors., 2009 ACJ 2763.

(2.) IT is urged by the learned counsel for the Appellant that the compensation awarded is excessive. It is contended that Insurance Company proved the breach of terms of the policy as the driving licence owned by the driver was found to be fake. The Claims Tribunal instead of exonerating the Appellant directed it to satisfy the award with a right to recover the same from the owner and driver of the vehicle involved in the accident.

(3.) SCC 21. 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 provisions 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 issuance of certificate of insurance, 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: