NEW INDIA ASSURANCE CO LTD Vs. ARUN GUPTA

JUDGEMENT

(1.) APPELLANT New India Assurance Company Limited impugns a judgment dated 27.03.2012 whereby while awarding a compensation of RS.7,58,946/- in favour of Respondent No.1, the Claims Tribunal instead of exonerating the APPELLANT, made it liable to pay the compensation and to recover it from Respondent No.3, the owner of the vehicle No.HR-55-A-9460, which caused the accident.

(2.) IT is urged by the learned counsel for the Appellant that since it was established that Respondent No.2 did not possess a valid and effective driving licence at the time of the accident, the Insurance Company has no liability to pay the compensation at all. My attention is drawn to para 19 of the impugned judgment which is extracted hereunder:-

(3.) IT was proved on record that a notice under Order XII Rule 8 CPC was served upon the owner who failed to produce the permit in the Court as required in the notice. As per Section 149(2)(a), an insurer is entitled to defend the action on the grounds as mentioned under Section 149(2)(a)(i) 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 v. P. Sesh Reddy, (1996) 5 SCC 21 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: