NATIONAL INSURANCE CO LTD Vs. SANTOSH GANDHI

JUDGEMENT

(1.) THE Appellant National Insurance Company Limited impugns a judgment dated 03/04.08.2010 passed by the Motor Accident Claims Tribunal (the Claims Tribunal) whereby a compensation of Rs. 6,50,000/- was awarded in favour of Respondents No.1 and

(2.) AND the Appellant was made liable to pay the compensation. 2. The sole ground of challenge is that during inquiry before the Claims Tribunal it was established that the bus was overcrowded and thus, the insured committed the breach of the terms and conditions of permit and consequently, the insurance policy. Thus, the learned counsel argues that the Insurance Company was entitled to recover the compensation from the insured.

(3.) THE question for consideration however is whether this amounts to breach of the terms of the policy as envisaged under Section 149(2)(a) of the Motor Vehicles Act, 1988 (the Act). A similar contention came up for consideration in National Insurance Co. Ltd. v. Anjana Shyam & Ors., (2007) 7 SCC 445. The bus had carrying capacity of 42 passengers for which it paid the premium. It was overloaded and was carrying 90 passengers. The bus fell off the road into a nala leading to death of 26 persons including the driver and injuring 63 other persons. The legal representatives of the deceased and the injured approached the Motor Accident Claims Tribunal claiming compensation under Section 166 of the Act. A contention was raised before the Claims Tribunal that it was a fundamental breach of the contract of Insurance and therefore, the Insurance Company could repudiate the policy and was not liable for the compensation that may be adjudged. The Claims Tribunal brushed aside the objection and passed the award. The Insurance Company filed 38 Appeals before the Himachal Pradesh High Court. The High Court held that overloading of a bus which had permit to ply on the route with only 42 passengers did not amount to violation of the route permit or any other law for which the State Govt. could be held to be contributory negligence and that the Insurance Company was liable to pay the amounts as awarded by the Claims Tribunal. The Insurance Company approached the Supreme Court where it was held that Insurance Company would be liable to pay compensation in respect of 42 awards passed for the highest amount which would be distributed amongst the injured/legal representatives of the deceased equitably.