NATIONAL INSURANCE COMPANY LTD Vs. MAMTA GUPTA

JUDGEMENT

(1.) CAV . 152/2015 in MAC APP.145/2015 CAV. 150/2015 in MAC APP.146/2015

(2.) IT is urged by the learned counsel for the Appellant that since the Insurance Company successfully proved conscious breach of the terms of insurance policy, it was entitled to be exonerated of its liability instead of making it liable to first satisfy the award and then to recovery from the insured.

(3.) THE issue of satisfying third party liability even in case of conscious breach of the terms and conditions of the insurance policy is settled by three Judge Bench Sohan Lal Passi v. P. Sesh Reddy, 1996 5 SCC 21. As per Section 149(2) of the Motor Vehicles Act, 1988 (the Act), an insurer is entitled to defend an action on the grounds 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 terms and conditions of the insurance 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 it 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 also 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 victims 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 conditions of the policy. The three Judge Bench of the Supreme Court in Sohan Lal Passi analysed the corresponding provisions under the Motor Vehicles Act, 1939 and the Motor Vehicles Act, 1988 and approved the decision in Skandia. 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 as well as the three Judge Bench decision in Sohan Lal Passi 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 in New India Assurance Co. Shimla is extracted hereunder: