Andhra HC (Pre-Telangana)
Manager, United India Insurance ... vs Shekamma And Others on 8 March, 1994
Equivalent citations: 1995ACJ86, AIR1994AP338, 1994(2)ALT312, AIR 1994 ANDHRA PRADESH 338, (1995) 1 ACJ 86, (1994) 2 ANDH LT 312, (1994) 1 LS 248, (1994) 2 TAC 105
JUDGMENT
1.The insurer of a lorry bearing registration No. AAQ 4868 has filed this appeal questioning the judgment dated 31st March, 1989 in M.V.O.P. No. 14 of 1988on the file of the Motor Accidents claims Tribunal (II Additional District Judge), Kurnool, whereunder a sum of Rs. 45,000/- was awarded as compensation to the legal representatives of one Guntappa who died in a motor accident that look place on 25-11-1986.
2. The undisputed facts are:
Respondents 1 to 4 herein are the legal representatives of the deceased who was working as a hamali in the lorry bearing registration No. AAQ4868. He died on 25-11-1986 in the accident that was caused by the said lorry. The accident occurred when the lorry went off the road and fell into ditch. The 5th respondent herein was the driver of the lorry. It was insured with the appellant under policy No., 50702/302/25/1/2948. Effective date of commencement of insurance was 8-5-1986 and the date of expiry was 7-5-1987. The lorry was plying on the strength of temporary permits issued from time to time, each for a period of four months. On the date of issuance of insurance policy, it had a temporary permit. Another temporary permit was given for the period from 15-7-1986 to 14-11-1986. But, on the date of accident i.e., 25-11-1986, it was plying without a permit, carrying seven passengers, excluding the driver. The appellant had issued insurance policy for the period beyond the validity of permit held by the owner of the lorry. As per the accident report of the Motor Vehicles Inspector Ex. A-5, the lorry had valid fitness certificate for the period from 16-5-1986 to 15-5-1987.
3. The appellant tried to avoid its liability mainly on the ground that the lorry was plied contrary to the terms of insurance policy. But, the claims Tribunal, having negatived its plea, partly allowed the petition and awarded a compensation of Rs. 45,000/-.
4. Sri S. Hanumaiah, learned counsel for the appellant, submits that the appellant is not liable to pay compensation for two reasons-
(i) The insured had plied the vehicle in contravention of the statutory provisions of the Motor Vehicles Act, 1939 (for short 'the Act') and
(ii) He committed breach of the terms of contract of insurance.
He rests the first limb of his submission on Sections 95(2)(a) and 96(2)(b)(1)(a) and b(1)(c) of the Act the second one on the following conditions in the policy of insurance.
"The policy does not cover:
(1) Use for organised racing, pace-making, reliability trial or speed testing.
(2) Use whilst drawing a trailer except the towing (other than for reward) of any one disabled mechanically propelled vehicle.
(3) Use for carrying passengers in the vehicle except employees (other than driver) not exceeding six in numbers coming under the purview of the W.C. Act, 1923."
5. Sections 95 and 96 are in Chapter VIII of the Act, which deals with compulsory insurance of motor vehicles against third party risks, liability of insurer, indemnification of insured, constitution of Claims Tribunals and claims etc. Sub-section (1) of Section 95 states the requirements of policies and limits of liability. Sub-section (2)(a) of Section 95 provides:
"(2) Subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the following limits, namely:-
(a) where the vehicle is a goods vehicle, a limit of one lakh and fifty thousand rupees in all, including the liabilities, if any, arising under the Workmen's Compensation Act, 1923, in respect of the death of, or bodily injury to employees (other than the driver) not exceeding six in umber, being carried in the vehicle."
Sub-section (1) of Section 96 lays down the duty of the insurers to satisfy the judgments of the claims Tribunal against persons insured against third party risks. Sub-section (2) of Section 96 specifies the defence open to the insurers to resist the claims. To avoid repetition, let me reproduce Section 96(2):
"(2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given, the insurer had notice through the Court, of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal, and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:
(a) that the policy was cancelled by mutual consent or by virtue of any provision contained therein before the accident giving rise to the liability, and that either the certificate of insurance was surrendered to the insurer or that the person to whom the certificate was issued has made an affidavit stating that the certificate has been lost or destroyed or that either before or not later than fourteen days after the happening of the accident, the insurer has commenced proceedings for cancellation of the certificate after compliance with the provisions of Section 105; or
(b) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:-
(i) a condition excluding the use of the vehicle-
(a) for hire or reward, where the vehicle is on the date of the contract of insurance, a vehicle not covered by a permit to ply for hire or reward, or
(b) for organised racing and speed testing, or
(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or
(d) without side car being attached, where the vehicle is a motor cycle or;
(ii)a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or
(c) 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."
6. It is well settled that excepting the above, no other defence is available to an insurer unless there is a specific clause in the policy reserving the right to defend the action in the name of the assured. (See B.I.G. Insurance Company v. Itbar Singh, and M. Kondaiah v. Yaseen Fatima, AIR 1986 AP 62.
7. Sri Hanumaiah, learned counsel for the appellant placing strong reliance on Clause (b)(i)(a) of sub-section (2) of Section 96 of the Act, submits that since the insured had plied the vehicle without a valid permit as on the date of accident, the appellant is absolved of its liability. It is not in dispute that the vehicle had no valid permit as on the date of accident i.e., 25-11-1986. But, it had a valid permit as on the date of contract of insurance. Otherwise, the appellant would not have issued insurance policy. Moreover, it is not even the case of the appellant that the vehicle had no valid permit as on the date of contract of insurance. It is clear from Clause (b)(i)(a) that the insurer can avoid its liability only when it is proved that the vehicle was not covered by a permit as on the date of contract of insurance. Therefore, I am of the clear view that the appellant cannot escape its liability on this ground.
8. The next submission of Sri Hanumaiah is that Clause (a) of Sub-section (2) of Section 95 of the Act prohibits a goods vehicle from carrying more than six employees, excluding the driver and thus, the vehicle in question was used for a purpose not allowed by the permit. I find no force in this submission for reasons more than one. Clause (a) of subsection (2) of Section 95 limits the liability of an insurer in the case of goods vehicle to a sum of Rs. 1,50,000/-. This limit includes its liabilities, if any, arising under the Workmen's Compensation Act, 1923, in respect of the death of, or bodily injury to employees not exceeding six in number, excluding the driver, being carried in the vehicle. It does not deal with conditions of permit in respect of a goods vehicle. Nor does it prohibit a goods vehicle from carrying more than six employees, excluding the driver. In fact, sub-section (2) of Section 56 of the Act and sub-rule (v) of Rule 213 of the A.P. Motor Vehicles Rules, 1964 deal with the conditions to be attached to a permit in respect of a goods vehicle. Subsection (2) of Section 56 empowers the Regional Transport Authority to attach one or more of the nine conditions specified therein to a goods vehicle. None of the said nine conditions prohibits a goods vehicle from carrying more than six employees, excluding the driver. Sub-rule (v) of Rule 213 of the A.P. Motor Vehicles Rules, 1964, empowers the concerned Transport Authority to attach the following additional condition to a permit granted in respect of a goods vehicle.
"Not more than six persons in all in addition to the driver shall be carried in the vehicle except will the permission of the transport Authority."
From the above, it is clear that more than six persons may be carried in a goods vehicle with the permission of the concerned transport authority. In the present case, the appellant has not chosen to adduce any evidence to prove that a condition was attached to the permit not to carry more than six employees and there was no permission from the concerned transport authority to carry more than six employees. Therefore, I find it difficuit to accept the contention that the vehicle had been used for a purpose not allowed by the permit. It is accordingly rejected.
9. Then remains the contention that the insured had committed breach of conditions of contract of insurance. In this context, Sri Hanumaiah draws my attention to the following clauses in the policy of insurance.
"LIMITATIONS AS TO USE:
Use only under a Public Carrier's permit within the meaning of the Motor Vehicles Act, 1939.
The Policy does not cover:
(1) to (2) .....
(3) Use for carrying passengers in the vehicle except employees (other than driver) not exceeding six in numbers coming under the purview of the W.C. Act, 1923."
and submits that they are the conditions of contract of insurance and the insured had committed breach of the same. I am not impressed with this argument either. As already noticed, the appellant had issued the policy of insurance, with his eyes wide open, for a period of one year commencing from 8-5-1986 and ending with 7-5-1987, though the insured had only a temporary permit for a period of four months, as on the date of contract of insurance. It is not in dispute that the appellant had collected premium payable for one year. It is also not in dispute that the insured had a valid permit as on the date of contract of insurance. In view of this, it is already held by me that this defence is not available to the appellant in view of the provisions of sub-section (2) of Section 96 of the Act. Therefore, it has to be considered whether it would be open to the insurer to avoid its liability on the ground of violation of the terms of policy of insurance. In Raghunath v. Shardabai, Sawanth J., speaking for a Division Bench observed at page 389:
"The insurer can avoid his liability only if the conditions specified in Section 96(2) are satisfied, and not otherwise. The contract between the insurer and the insured may permit the insurer to avoid his liability under various circumstances. However, if those circumstances do not satisfy the provisions of Section 96(2), the insurer cannot escape his liability for the third party risks. The statute recognises no other condition for an insurer to escape his liability except those given in Section 96(2) whatever the terms of the contract between the insurer and the insured. The terms of the contract between the insurer and the insured determining their rights and liability towards each other are not and should not be confused with the statutory liability of the insurer for the third party risks. If there is a breach of the contract on the part of the insured, the insurer may proceed against the insured. As far as the third party risks are concerned, the liability being statutory, it cannot be overridden by the terms of the contract of insurance, between parties."
(Para 9) Same is the view of the Madras High Court in National Insurance Co. v. T. Elumalai, , wherein Mrs. Padmini Jesudurai, J. held at page 75:
".....an insurer is not entitled to take a defence, which is not specified in S. 96(2) of the Act. These provisions have to be construed strictly. As stated earlier, it is not the breach of any conditions of the policy of insurance, that would provide the insurer a defence under Section 96(2) of the Act. The policy of insurance may permit the insurer to avoid its liability under various circumstances. However, as against the liability of the insurer to third parties, the terms of the policy of insurance are subject to the provisions of S. 96(2) of the Act. If there is a breach of the contract on the part of the insured the insurer could proceed against the insured, but as far as the third party risks are concerned, the liability having been created by the statute, cannot be overridden by the terms of the contract of insurance between the parties.
(Para 17) I am in respectful agreement with the above view. Therefore, it must be held that the appellant cannot escape its liability and perhaps the only course open to it is to proceed against the insured.
10. As already noticed, there is no evidence in the present case that a condition was attached to the permit, prohibiting carrying of more than six employees and there was no permission from the concerned transport authority to carry more than six employees excluding the driver. Thus, I find no substance in the contention of the learned counsel for the appellant that the insured had committed breach of conditions of contract of insurance by carrying more than six employees. Even otherwise, this plea is not available to the appellant in view of the decision in Raghunath's case (supra), which was assented to by Ramaswamy J., (as he then was) in K. Varamma v. P. Ramakotaiah, 1989 (3) ALT 491. In Raghunath's case, a similar contention was rejected by Sawant, J. in the following terms:
"..... A breach of the condition of the permit is not the same thing as a breach of the purpose for which it is issued. There was therefore no contravention either of clause (b)(i)(a) or of (b) (i)(c) of Section 96(2) which clauses alone are and can be pressed into service on behalf of the insurance company."
(Para 8)
11. For the aforesaid reasons, I find no merit in the appeal. It is, accordingly, dismissed. There will be no order as to costs.
12. Appeal dismissed.