ORIENTAL INSURANCE CO LTD Vs. NANI JANAKI

JUDGEMENT

(1.) The Oriental Insurance Co. Ltd., the third respondent in O.P. (M. V.) No. 1339 of 1987 of the M.A.C.T., Kollam is the appellant before us. The respondents 1 to 4 are the claimants who are the legal heirs of deceased Ramakrishnan Achary who died on 9.5.1987 as a result of the injuries sustained by him in the accident involving the vehicle No. KRQ3057. They claimed an amount of Rs. 50,000/- as compensation for the death of Ramakrishnan Achary. After the enquiry the Tribunal awarded a sum of Rs. 37,000/- with 12% interest as compensation. The Tribunal however directed the appellant to indemnify the owner of the vehicle for the compensation awarded. The Insurance Company being dissatisfied with the above award, filed the present appeal.

(2.) The Standing Counsel for the Insurance Company very forcefully argued before us that the appellant was not liable to indemnify the owner in as much as the offending vehicle had been used in violation of the policy conditions. According to him, there is breach of conditions of policy as prescribed in S.96(2)(c) of the Motor Vehicles Act, 1939 (for short 'the Act'). S.96 is a substantive provision which declares the liability of the insurer to pay the claimant directly. Though there is no privity of contract between the insurer and claimant this section fixes the liability and entitles the claimant to claim compensation from the insurer. Under sub-s. (1) even if the insurer is entitled to avoid or cancel the policy, the insurer will have to fulfill its duty of statutory indemnity to the claimants in view of the non obstante clause contained therein. Sub-s. (2) provides that no sum shall be payable by the insurer under sub-s. (1) unless the insurer had notice through the Court of the bringing of the proceeding for claim of compensation.

(3.) Not with standing the above, let us examine the conditions based on clause (c) of sub-s. (2) of S.96 that the policy is void on the ground that it was obtained by the non disclosure of a material fact or by a representation of fact which was false in some material particular. What is contemplated under the above provision is that the policy must have been obtained by the party as a result of the non disclosure of material facts at the time of obtaining the policy. In this case, the vehicle was insured on 14.7.1986 as a private car and the insurance premium was paid on that basis. The case of the appellant is that subsequently the owner of the vehicle had altered the character of the vehicle on 31.7.1996 and thereby used it as a contract carriage. From these allegations we cannot say that the owner of the vehicle has misrepresented the facts on 14.7.1986 at the time of obtaining the policy. On that day, it was a private car and admittedly the alternation was made only on 31.7.1986. Therefore, there is no violation of the provisions contained in S.96(2)(c).