Karnataka High Court
United India Insurance Company ... vs Chandamma And Others on 1 October, 1999
Equivalent citations: II(2000)ACC574, II(2000)ACC631, 2001ACJ1351, ILR2000KAR1302, 2000(2)KARLJ462
Author: Mohamed Anwar
Bench: Mohamed Anwar
JUDGMENT Mohamed Anwar, J.
1. The short question that has been raised for our determination in this series of appeals and writ petitions by the appellants/petitioners-insurers is:
"Whether the insurer is not liable to indemnify the insured owner of a "contract carriage" against any liability incurred by him on account of death of or bodily injury to third party caused by use of the vehicle if the vehicle is used by him as a stage carriage" in a public place in breach of the condition of its permit"?
2. Admittedly, the offending vehicles involved in all these cases were the "contract carriages" covered by valid permits issued by the prescribed authority under the Motor Vehicles Act, 1988 ('the Act' for short). They were involved in the accidents occurred on various dates resulting in injuries to/deaths of several passengers travelling therein, which had given rise to the respective claims to compensation by the victims of accidents or the dependents of the deceased victims, before the respective Motor Accident Claims Tribunals. It is not in dispute that each of these vehicles was covered by the valid and current "Act Only" insurance policies of the respective appellants/petitioners-insurers. These insurers were respondents in the claim petitions before the Tribunals. The petitions were contested by them on the common ground that the respective vehicles which were plying as "contract carriages" had been used as "stage carriages" when the respective accidents occurred, and in violation of the condition of the insurance policies. In other words, their defence was that the offending vehicles, at the material time, having been used by the insured owners thereof as stage carriages in breach of condition of their insurance policies as also of their respective permits issued by the prescribed authority under the Act for their use only as "contract carriages", they were not liable in law to indemnify the insured owners and pay compensation to the claimants. The Tribunals have negatived their contention and have passed the respective impugned awards holding them also liable to pay the compensation to the respective claimants. Hence, the respective appeals by the insurers of the said vehicles.
3. In the light of the relevant provisions of the Act and on consideration of the relevant condition in the policies of insurance which were produced in evidence and marked as exhibits, we find that, for the reasons stated hereinbelow, the appellants/petitioners-insurers, by pleading the said defence, cannot escape their liability to indemnify the insured and satisfy the impugned awards.
4. The material portion of the said condition in the policies, vide Ex. R. 2 in M.V.C. No. 498 of 1993 giving rise to M.F.A. No. 4317 of 1998, is reproduced below:
"Limitations as to use:
The policy covers the use only under a permit within the meaning of Motor Vehicles Act, 1988.....".
5. It is an undisputed position of law that by virtue of Section 149 of the Act, the insurer of a vehicle is bound to satisfy the judgment and award against the insured owner of the vehicle in respect of third parties, if its defence to the claim of third parties in respect of risk arising out of an accident involving the insured vehicle does not fall within one or the other grounds stipulated in sub-section (2) thereof. Therefore, the insurer can avoid its liability only by availing any of these statutory defence grounds which are reproduced below:
"149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.--
(1) XXX XXX XXX.
(2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award 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 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 motorcycle; 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
(b) 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. Admittedly, the ground spelt out under sub-clauses (b), (c) and (d) of clause (a)(i) and the ground under clause (b) of Section 149(2) are not applicable to the defence of insurers in these cases. On the other hand, an attempt had been made for the insurers to bring their cases within the purview of the defence ground envisaged in sub-clause (a) of sub-section (2)(a)(i). This ground is also not available to them for the reason that, admittedly, each of the offending vehicles was covered by a valid permit to carry passengers for hire or reward as they were "public service vehicles". Merely because these vehicles were stated to have stopped and picked up passengers on the permitted route, presumably in breach of their permit condition, that by itself does not constitute a statutory defence available in sub-section (2)(a)(i)(a) of Section 149. In fact, Section 149(2) of the New Act i.e., Act of 1988, corresponds to Section 96(2) of the Old Act i.e., Act of 1939. The same defence grounds as are contained in Section 149(2) of the New Act were existing as the defence grounds under sub-section (2)(b) and (c) of Section 96 of the Old Act. Similar question had arisen for consideration of the Division Bench of this Court in the case of K.V. Thimmegowda v Kamalamma' and the same had been answered holding:
"An Insurance Company is liable to pay compensation in respect of the injury to or death of a third party, caused by a motor accident by a motor vehicle, which is a stage carriage while plying or being used lawfully otherwise than as a stage carriage, at a public place, even if such public place does not lie on the route in respect of which it is permitted to operate as a stage carriage".
Therefore, in law the appellants/petitioners-insurers are not exempt from their liability to pay compensation under their respective 'Act Policies' by mere reason of 'contract carriages' in question being plied as 'stage carriages' in breach of their permit condition since such a defence plea is not permissible under sub-section (2) of Section 149 of the Act. If the said vehicles were found to have been plying in breach of their permits condition, it is open for the concerned authorities under the Act to take appropriate action as is permissible under other provisions thereof viz., Sections 86, 177 and 192, as the case may be. Therefore, we find the contention of the learned Counsel for appellants/writ petitioners without force and weight and the appeals are, therefore, bound to fail.
7. Hence, all the appeals and writ petitions are dismissed.