ORIENTAL INSURANCE CO LTD Vs. BALAKRISHNAN

JUDGEMENT

(1.) These appeals are arising from a common award passed by the M.A.C.T., Thalassery dated 28.11.1995 in O.P. (M.V.) Nos. 809 & 810 of 1992. The insurer of the vehicle involved in the accident, M/s. Oriental Insurance Company Ltd. is the appellant in both the appeals. Two persons who had sustained injuries in the accident occurred on 13.2.1992 filed applications for compensation in respect of the injuries sustained by them. The Tribunal after the enquiry awarded a sum of Rs. 13,000/- with 12% interest in O.P. (M.V.) No. 809/92. Likewise in O.P. (M.V.) No. 810/92 the Tribunal awarded a sum of Rs 65,000/- with 12% interest. It further ordered that the owner of the vehicle shall be indemnified by the appellant in so far as the compensation awarded to the claimants. The insurer being aggrieved by the said direction, filed these appeals.

(2.) The learned counsel for the appellant submitted that there was violation of the permit conditions and therefore, the insurer was not liable to indemnify the owner of the vehicle. He has specifically brought to our notice the provisions contained in S.149(2)(a)(i)(c) of the Motor Vehicles Act, 1988. S.149(1) mandates the liability of the insurer to satisfy judgments and awards against persons insured in respect of third party risks. If after a certificate of insurance has been issued under sub-s. (3) of S.147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability is obtained against any person insured by the policy, then the insurer shall pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured, as if he were the judgment debtor in respect of the liability. However, sub-s. (2) of S.147 provides that no such sum shall be payable by an insure in respect of any judgment or award unless the insurer had notice through the court or Tribunal of the bringing of the proceedings. An insurer to whom the notice as above is given, shall be entitled to be made a party thereto and to defend the action on any of the grounds mentioned in clause (a) or (b) thereof. As per clause (a)(i)(c) the insurer is entitled to defend the action on the ground that there has been a breach of a specified condition of the policy, namely a condition excluding the use of the vehicle for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle. The argument is that insured has used the vehicle for the purpose not allowed by the permit. The allegation is that as per the permit condition the maximum carrying capacity of the vehicle is 6 including the driver but it actually carried 11 persons and thus the policy condition had been violated by the owner of the vehicle. Therefore, the insurer is not liable to indemnify the owner in respect of the award obtained against him by the claimants. However, the Tribunal found that there was no evidence in this case to show that the insured had wilfully violated the breach of the conditions of the policy. In this context, it has to be observed that there is no evidence to the effect that the insured has actually permitted the driver of the vehicle to carry persons in excess of the maximum capacity.

(3.) In Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan and Others ( AIR 1987 SC 1184 ) the Supreme Court was considering the corresponding provisions contained in the Motor Vehicles Act, 1939, namely S.96(1)(2)(b). There the expression 'breach' has been interpreted and observed that the dictionary meaning of 'breach' is infringement or violation of a promise or obligation. The Supreme Court further said that it is therefore, abundantly clear that the insurer will have to establish that the insured is guilty of an infringement or violation of a promise that a person who is duly licensed will be in charge of the vehicle. The very concept of infringement or violation of the promise that the expression 'breach' carries within itself induces an inference that the violation or infringement on the part of the promisor must be a willful infringement or violation. It is only when the insured himself places the vehicle in charge of a person who does not hold a driving licence, it can be said that he is 'guilty' of the breach of the promise that the vehicle will be driven by a licensed driver. Unless the insured is at fault and a guilty of a breach the insurer cannot escape from the obligation to indemnify the insured and successfully contend that he is exonerated having regard to the fact that the promisor (the insured) committed a breach of his promise.