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Uttarakhand High Court · body

2007 DIGILAW 436 (UTT)

Laxman Singh v. Smt. Prema Devi and others

2007-08-09

RAJESH TANDON

body2007
Judgment Heard Sri Neeraj Upreti, counsel for the appellant and Sri Pankaj Purohit, counsel for the respondent no. 5. 2. By the present A.a. filed under Section 173 of the Motor Accident Claims Tribunal, appellant has prayed for setting aside the award dated 24-6-2006 passed by the Motor Accident Claims Tribunal, District Judge, Pithoragarh in Motor Accident Claim Petition No. 17 of 2004 Smt. Prema Devi and others Vs. Laxman Singh and another, whereby the tribunal has passed an award to the extent of Rs. 1,92,00/- along with interest @ 7% per annum. 3. Briefly stated, a claim petition was filed by the claimants-respondents no. 1 to 4 being Motor Accident Claim Petition No. 17 of 2004 Smt. Prema Devi and others Vs. Laxman Singh and another praying to the following effect: 4. According to the claim petition, on 30-6-2003, when Prem Singh (deceased) was coming by Jeep No. U.A. 05/0383 (hereinafter referred to as the Jeep), the Jeep caused an accident near Badeli (Munsyari) and fell down into a ditch, due to which deceased received fatal injuries and, when he was being taken to the Hospital, he succumbed to injuries in the way. At the time of accident, the driver was driving the Jeep rashly and negligently. At the time of accident, the deceased was 25 years of age and was earning a sum of Rs. 10,000/- from giving tuition, cultivation and dairy work and used to give Rs. 5,000/- to the claimants. At the time of accident he was studying in M.Sc. Claimants have claimed a total sum of Rs. 21 ,70,000/ - along with interest @ 12% per annum towards compensation. 5. Opposite parties have contested the case by filing written statements. 6. Opposite party no. 1 has stated in its written statement that at the time of accident, the driver of the Jeep was driving the Jeep in a moderate speed, but due to bad road, heavy rain and narrow way and there being debris on the road, the Jeep slipped and fell down into the river. He has stated that the Public Works Department is responsible for the accident. It has further been stated that the Jeep was having valid registration, fitness, permit and passenger tax had already been given and the Jeep was comprehensively insured with United India Insurance Company Ltd., therefore, the Insurance Company is liable to pay the compensation to the claimants. He has stated that the Public Works Department is responsible for the accident. It has further been stated that the Jeep was having valid registration, fitness, permit and passenger tax had already been given and the Jeep was comprehensively insured with United India Insurance Company Ltd., therefore, the Insurance Company is liable to pay the compensation to the claimants. 7. Opposite party No.2-Insurance Company has stated in its written statement that the amount claimed towards compensation is excessive and the burden lies on the owner of the Jeep to prove that the driver of the Jeep was having valid driving licence with hill endorsement on it. 8. On the pleadings of the parties, the claims tribunal has framed following issues: 9. On behalf of the claimant, Prema Devi and Lalit Singh have been examined as P.VV.1 and P.W.2 respectively. In documentary evidence, copies of First Information Report and Post Mortem Report were produced. 10. On behalf of opposite parties, Laxman Singh and Chandra Pal Singh Tomar& Surveyor have been examined as D.W.1 and D.W.2. In documentary evidence, fitness tax deposit certificate, Driving Licence, Insurance, Registration, copies of permit were produced. 11. While deciding the Issue NO.1 as to whether on 30th June, 2003 at about 7.15 p.m. near Village Bhadeli, the accident took place by Vehicle No. U.A. 05/0383, which was being driven rashly and negligently by its driver and as a result of the same Prem Singh died, claims tribunal has placed reliance on statement of P.W.1, who has stated that on 30th June, 2003 his husband was going from UA 05/0383 to his house Sirtaula and near Bhadeli the accident took place in which he died on the spot. Report of the same was given to the Patwari of the area. Lalit Singh P.W.2, who is an ocular witness has stated that the vehicle in question was being driven rashly and negligently. On the basis of the aforesaid statement, a finding has been recorded that the vehicle in question was being driven rashly and negligently. 12. While deciding Issue No.2 as to whether the driver of the vehicle in question had a valid driving licence, reliance has been placed on the statement of D.W.2 Anand Singh S/o Keshar Singh, who has stated that the driver was having a valid driving licence. 13. 12. While deciding Issue No.2 as to whether the driver of the vehicle in question had a valid driving licence, reliance has been placed on the statement of D.W.2 Anand Singh S/o Keshar Singh, who has stated that the driver was having a valid driving licence. 13. While deciding Issue No.4 as to whether Jeep in question was over-loaded, it has come on the record that at the time of accident at least 11 persons were traveling through the limit is of only seven persons and as such the issue was decided in favour of the Insurance Company. 14. While deciding the Issue No.3, claims tribunal has taken into consideration the age of the deceased, which is 25 years. The tribunal has fixed the notional income to the extent of Rs. 15,000/- per annum. After deducting 1/3 out of the said amount, the dependency comes to Rs. 10,000/-. According to his age, multiplier of 18 has been selected. After multiplying with 18, the amount comes to Rs. 1,80,000/-. A sum of Rs. 2,000/- towards funeral expenses and Rs. 10,000/- have been awarded towards the loss of love and affection. Thus a total sum of Rs. 1,92,000/- has been awarded by the claims tribunal. 15. Sri Neeraj Upreti has challenged the finding of the claims tribunal regarding recoverable rights given to the Insurance Company from the owner. He has stated that there being no violation or breach of the policy as contained under Section 149(i) of the Motor Vehicles Act, recoverable rights cannot be given to the Insurance Company from the owner. 16. On the other hand Sri Pankaj Purohit has submitted that the recoverable rights have been given to the Insurance Company as it has come on the record that the vehicle in question was over loaded. 17. I have perused the Photostat copy of the cover-note of the policy issued by the Insurance Company, where the Insurance Company has issued the cover note by which the vehicle was insured on 8th July, 2002 and was valid upto 7th July, 2003. The accident had taken place on 30th June, 2003 and therefore, the Insurance was valid on the said date when the accident took place. 18. Computation of premium shows that a sum of Rs. 11,788/- has been charged from the owner of the vehicle. The passengers have been shown to be seven in all. The accident had taken place on 30th June, 2003 and therefore, the Insurance was valid on the said date when the accident took place. 18. Computation of premium shows that a sum of Rs. 11,788/- has been charged from the owner of the vehicle. The passengers have been shown to be seven in all. The premium computation shows that a sum of Rs. 25/- has separately been paid for the driver and for persons sitting a sum of Rs. 1,000/- has separately been paid. For fair paying passenger Rs. 1260/- has been separately charged. Further another amount has been awarded as Rs. 120/- F.P.A The details are given below:- 19. As will appear from the aforesaid computation of premiums that for passengers, for drivers etc. etc. amount has been separately paid. . 20. From the statement of Lalit Singh - P.W.2, it has come in the evidence that the driver of the Jeep was driving the Jeep rashly and negligently as a result of which the deceased fell down from the hill and went into a ditch as a result of which all the passengers got injured. There were total six passengers sitting in the Jeep out of which Prem Singh, Net Singh and Govind Singh died on the spot and others also died as soon as they reached Munsyari Hospital. All the six passengers died, who were sitting in the Jeep. The statement is quoted below: 21. In the cross-examination, Lalit Singh has stated that along with him one Sri Shiv Singh, Narain Singh and Chand Singh have also got injured. 22. All the six passengers died, who were sitting in the Jeep. The statement is quoted below: 21. In the cross-examination, Lalit Singh has stated that along with him one Sri Shiv Singh, Narain Singh and Chand Singh have also got injured. 22. In order to approve the contention of the appellant, Section 149(2) of the Motor Vehicles Act is quoted below: "(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 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 organized 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 (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 of by representation of fact which was false in some material particular." 23. In the light of the aforesaid provision, counsel for the appellant has submitted that the provisions of Section 149(2) is applicable only when there has been a violation of the policy and since there was no violation of the policy, therefore, recovery rights granted by the claims tribunal to the Insurance Company is wholly without jurisdiction. 24. In the case National Insurance Co. Ltd. VS. Swaran Singh, 2004 AIR SCW 663*, the Apex Court has held as under: (iii) The breach of policy condition e.g. disqualification or the driver or invalid driving licence of the driver, as contained in sub-section (2 (a)(ii) of Section 149, has to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards the insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by a duly licensed driver or one who was not disqualified to drive at the relevant time. (vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards the insured unless the said breach or breaches on the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply "the rule of main purpose" and the concept of "fundamental breach" to allow defences available to the insurer under Section 149(2) of the Act." 25. In Swaran Singh (supra), reliance has been placed on the judgment of United India Insurance company Vs. Jaimy 1998 ACJ 1318 (Ker) and the breach of the specified condition of the policy enabling the insurer to avoid liability is available only if there is a breach of policy as contained under Section 149(2). Relevant observation is quoted below: "77. In United India Insurance Co. Ltd. v. Jaimy 1998ACJ 1318 (Ker) it is stated: (ACJ pp. Jaimy 1998 ACJ 1318 (Ker) and the breach of the specified condition of the policy enabling the insurer to avoid liability is available only if there is a breach of policy as contained under Section 149(2). Relevant observation is quoted below: "77. In United India Insurance Co. Ltd. v. Jaimy 1998ACJ 1318 (Ker) it is stated: (ACJ pp. 1324-25, paras 19-22) . "Section 149(2) relates to the liability of the insurer and speaks of a situation in regard to which no sum shall be payable by an insurer in respect of any judgment or award. In the context it is provided that an insurer to whom notice of bringing of any such proceeding is given could defend the action stated in the said statutory provision. The contention in the context would be found in Section 149(2)(1) in the even of a breach of a specified condition of the policy enabling the insurer to avoid liability in regard thereto. In the process in regard to the right of the insurer to recover the amount from the insurer, it would have to be seen by referred to Section 149(4) as to under what circumstances this can be successfully recovered from the insured. Section 149(4) says that where a certificate of insurance is issued, so much of the said policy as purport to restrict the insurance of the persons insured thereby by referring to any of the conditions mentioned and it is precisely enacted in regard thereto that the liability covered by Section 2(b) as is required to be covered by the policy would not be available. The position is made further clear by the proviso enacting that any sum paid by the insurer in or toward the discharge of any liability of any person who is covered by the policy by virtue of this sub section shall be recoverable by the insurer from that person. In other words, Section 149(4) considered the right of the insurance company in regard to reimbursement of the amount paid by them only in the context of a situation other than the one contemplated under Section 149(2)(b). It would mean that except under the situation provided by Section 149(2)(b), the insurer would not be in a position to avoid the liability because he has got rights against the owner under the above provision. It would mean that except under the situation provided by Section 149(2)(b), the insurer would not be in a position to avoid the liability because he has got rights against the owner under the above provision. The learned counsel strenuously submitted that this would not be the correct understanding and interpretation of the statutory provision of Section 149 of the 1988 Act. The learned counsel submitted that to read the statutory provision to understand that the insurance company could only claim from the owner in situations governed by Section 149(2)(b) and to have no right under the said provision with regard to other situations under Section 149(2)(a) would not be the proper reading of the statutory provision. The learned counsel submitted that in fact the provision would have to be meaningfully understood. It is not possible to consider the submission of the learned counsel in the light of the plain language of the statutory provision. It is necessary to emphasis that under the new Act the burden of the insurance company has been made heavier in the context of controlling the need of taking up contentions to legally avoid the liabilities of the insurance company." 78. The social need of the victim being compensated as enacted by Parliament was the subject-matter of consideration before a three-Judge Bench of this Court as early as in 1959 in British India General Insurance Co. Ltd. v. Captain Itbar Singh wherein Sarkar, J. speaking for the Bench observed: (AIR p. 1335, para 16) . "16. Again, we find the contention wholly unacceptable. The statute has no doubt created a liability in the insurer to the injured person but the statute has also expressly confined the right to avoid that liability to certain grounds specified in it. It is not for us to add to those grounds and therefore, to the statute for reason of hardship. We are furthermore not convinced that the statute causes any hardship. First, the insurer has the right, provided he has reserved it by the policy, to defend the action in the name of the assured and i he does so, all defences open to the assured can then be urged by him and there is no other defence that the claims to be entitled to urge. First, the insurer has the right, provided he has reserved it by the policy, to defend the action in the name of the assured and i he does so, all defences open to the assured can then be urged by him and there is no other defence that the claims to be entitled to urge. He can thus avoid all hardship, if any, by providing for a right to defend the action in the name of the assured and this he has full liberty to do. Secondly, if he has been made to pay something which on the contract of the policy he was not bound to pay, he can under the proviso to sub-section (3) and under sub-section (4) recover it from the assured. It was said that the assured might be a man of straw and the insurer might not be able to recover anything from him. But the answer to that is that it is the insurer's bad luck. In such circumstances the injured person also would not have been able to recover the damages suffered by him from the assured, the person causing the injuries." 26. So far as benefit confers on the third party by the Road Traffic, 1930, the same has been interpreted in the aforesaid judgment as under: "37. In Halsbury's Laws of England, 4th Edn. Reissue, Vol. 25, it is stated: "743. Benefits conferred on third parties by the Road Traffic Act, 1930. -It was against the background of the Third Parties (Rights Against Insurers) Act, 1930 that the Road Traffic Act, 1930 (now replaced by the Road Traffic Act, 1988), was passed. It was realized that, unless some alternations were made in the rights to which the third party was by the first named Act subrogated, those rights would frequently be of little, if any, value. Accordingly, it was provided that certain conditions in the assured's policy were to be of no effect in relation to a claim by a person to whom an assured was under a compulsorily insurable liability. The conditions to that extent avoided are any conditions providing (1) that no liability is to arise or (2) that any liability which has arisen is to cease, in the event of some specified thing being done, or omitted to be done, after the occurrence of the event giving rise to the claim. The conditions to that extent avoided are any conditions providing (1) that no liability is to arise or (2) that any liability which has arisen is to cease, in the event of some specified thing being done, or omitted to be done, after the occurrence of the event giving rise to the claim. If, therefore, any admission of liability is made after an accident contrary to a condition in the policy, or if, contrary to a condition in the policy, proper notice of the accident is not given to the insurers, the injured third party is not affected so far as his claim is concerned. " 38. This Court in Nicolletta Rohtagi 1 which has since been followed in Sadhana Lodh v. National Insurance Co. Ltd. 16 in no uncertain terms held that the defence available to an insurance company would be a limited one. 39. The question as to whether an insurer can avoid its liability in the event it raises a defence as envisaged in sub-section (2) of Section 149 of the Act corresponding to subsection (2) of Section 96 of the Motor Vehicles Act, 1939 had been the subject-matter of decisions In a large number of cases. 40. It is beyond any doubt or dispute that under Section 149(2) of the Act, an insurer, to whom notice of the bringing of any proceeding for compensation has been given, can defend the action on any of the grounds mentioned therein. 41. However, clause (a) opens with the words "that there has been a breach of a specified condition of the policy", implying that the insurer's defence of the action would depend upon the terms of the policy. The said sub-clause contains three conditions of disjunctive character, namely, the insurer can get away from the liability when (a) a named person drives the vehicle; (b) It was being driven by a person who did not have a duly granted licence; and (c) driver is a person disqualified for holding or obtaining a driving licence." 27. In the aforesaid case reliance has also been placed on Narcinva case (1985) 2 SCC 574, where it has been held as under: "The insurance company complains of breach of a term of contract which would permit it to disown its liability under the contract of insurance. In the aforesaid case reliance has also been placed on Narcinva case (1985) 2 SCC 574, where it has been held as under: "The insurance company complains of breach of a term of contract which would permit it to disown its liability under the contract of insurance. If a breach of a term of contract permits a party to the contra to not to perform the contract, the burden is squarely on that party which complains of breach to prove that the breach has been committed by the other party to the contract. The test in such a situation would be who would fail if no evidence is led." 28. As will appear from the aforesaid observation, the burden is squarely on that party who complains of breach to prove. 29. In the aforesaid case, the Apex Court has also interpreted Section 149(2) as under: . "90. We have construed and determined the scope of sub-clause (ii) a sub-section (2) of Section 149 of the Act. Minor breaches of licence conditions, such as want of medical fitness certificate, requirement about age of the driver and the like not found to have been the direct cause of the accident, would be treated as minor breaches of inconsequential deviation in the matter of use of vehicles. Such minor and inconsequential deviations with regard to licensing conditions would not constitute sufficient ground to deny the benefits of coverage of insurance to the third parties. 92. It may be true as has been contended on behalf of the petitioner that a fake or forged licence is as good as no licence but the question herein, as noticed hereinbefore, is whether the insurer must prove that the owner was guilty of the willful breach of the conditions of the insurance policy or the contract or insurance. In Lehru case the matter has been considered in some detail. We are in general agreement with the approach of the Bench but we intend to point out that the observations made therein must be understood to have been made in the light of the requirements of the law in terms whereof the insurer is to establish willful breach on the part of the insured and not for the purpose of its disentitlement from raising any defence or for the owners to be absolved from any liability whatsoever. We would be dealing in some detail with this aspect of the matter a little later." 30. The aforesaid interpretation relates to the minor breaches, which is inconsequential deviations with regard to licensing conditions and that will not be a ground to deny the benefit to coverage of insurance of third party. 31. In Oriental Insurance Company Vs. Amit and others 2007(1) U.D., 385, the Division Bench has also relied upon the judgment of the Apex Court in Swaran Singh's Case (supra) and has come to the conclusion that Section 149(2) of the Motor Vehicles Act is attracted only when there is fundamental breach. The observations are quoted below: "9...... Thus, it is not the case of the respondents that the excess passengers were sitting on the front seat by which the driver of the offending taxi was not able to drive It properly and he could not negotiate the bend due to overloading on the front seat. As such, the accident did not occur due to the overloading. It is to be kept in mind that the minor breaches of conditions of the insurance policy and the breaches which are not found to have been the direct cause of the accident would be treated as minor breaches of inconsequential deviation in the matter of use of vehicles. Such minor and in consequential deviation at with regard to the conditions of the insurance policy would not constitute sufficient grounds to deny the benefit of coverage of insurance to the claimant. Such a breach on the part of the insured must be established by the insurer to show that not only that the insured used or caused or permitted to be used the vehicle in breach of the Act but also that the damage the victim suffered flowed from the breach. In the case of National Insurance Company Ltd. Vs. Swaran Singh reported in 2004(3) SCC 297 & 2004 (1) U.D. p/195, the Hon ble Apex Court has held that he Tribunal in interpreting the policy conditions would apply "the rule of main purpose" and the consent of 'fundamental breach" to allow defences available to the insurer under section 149(2) of the Act. It has further been held that the damage suffered by the victim must flow from the breach and it must be shown by the insurer. It has further been held that the damage suffered by the victim must flow from the breach and it must be shown by the insurer. In the instant case, as we have already pointed out that the accident did not occur due to the breach of the conditions of the policy, as such we do not find any substance in the contentions raised by the learned counsel for the appellant." 32. In United India Insurance Co. Ltd. VS. Lehru and others 2003 AIR SCW 1695, the Apex Court has observed as under: "17. It is submitted that Kamla case is not correctly decided. It is submitted that subsection (7) of Section 149 of the Motor Vehicle Act, 1988 has not been noticed by this Court in Kamla Case (2001) 4 SCC 342. We see no substance in this submission. Aplain reading of Section 149 would show that an insurance company would continue to be liable to third persons. Section 149 read as follows: "149. Duty of insurers to satisfy the judgments and awards against persons insured in respect of third-party risks. - (1) If, after a certificate of insurance has been issued under sub-section (3) of Section 147 in favour of the persons by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of subsection (1 ) of Section 147 (being a liability covered by the terms of the policy) or under the provisions of Section 163-A IS obtained against any person insured by the policy then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as If he were the Judgment-debtor, In respect of liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments. (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 organized 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 sidecar 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 had 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 condition 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. 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. (3) Where any such judgment as is referred to in sub-section (1 ) is obtained from a court in a reciprocating country and In the case of a foreign judgment is, by virtue of the provisions of Section 18 of the Code of Civil Procedure, 1908 (5 of 1908) conclusive as to any matter adjudicated upon by it, the insurer [being an insurer registered under the Insurance Act, 1938 (4 of 1938) and whether or not be is registered under the corresponding law of the reciprocating country] shall be liable to the person entitled to the benefit of the decree In the manner and to the extent specified in sub-section (1), as if the judgment were given by a court in India: . Provided that no sum shall be payable by the insurer in respect of any such judgment unless, before the commencement of the proceedings in which the judgment is given, the insurer had notice through the court concerned of the bringing of the proceedings and the insurer to whom notice is so given is entitled under the corresponding law of the reciprocating country, to be made a party to the proceedings and to defend the action on grounds similar to those specified in sub-section (2). (4) Where a certificate 01' insurance has been issued under sub-section (3) of Section 147 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in clause {b} of sub-section (2) shall, as respects such liabilities as are required to be covered by a policy under clause (b) of sub-section (1) of Section 147, be of no effect: Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person. (5) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person. (6) If this section the expressions 'material fact' and 'material particulars' means, respectively a fact or particular of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk, and if so, at what premium and on what conditions, and the expression 'liability covered by the terms of the policy' means a liability which is covered by the policy or which would be so covered but for the fact that the insurer in entitled to avoid or cancel or has avoided or cancelled the policy. (7) No insurer to whom the notice referred to in sub-section {2} of sub-section (3) has been given shall be entitled to avoid his liability to any person entitled to the benefit 01' any such judgment or award as is referred to in sub-section (1) or in such judgment as is referred to in sub-section (3) otherwise than, in the manner provided for in sub-section (2) or in the corresponding law of the reciprocating country, as the case may be." Thus under sub-section (1) the insurance company must pay to the person entitled to the benefit of the decree, notwithstanding that it has become' entitled to avoid or cancel or may have avoided or cancelled the policy". The words "subject to the provisions of this section" mean that the insurance company can get out of the liability only on grounds set out in Section 149. Subsection (7), which has been relied on, does not state anything more or give any higher right to the insurance company. On the contrary, the wording of sub-section (7) VIZ. "no insurer to whom the notice referred to In sub-section (2) or sub-section (3) has been given shall be entitled to avoid his liability" indicates that the legislature wanted to clearly indicate that insurance companies must pay unless they are absolved of liability on a ground specified in sub-section (2). On the contrary, the wording of sub-section (7) VIZ. "no insurer to whom the notice referred to In sub-section (2) or sub-section (3) has been given shall be entitled to avoid his liability" indicates that the legislature wanted to clearly indicate that insurance companies must pay unless they are absolved of liability on a ground specified in sub-section (2). This is further clear from sub-section (4) which mandates that conditions, in the insurance policy, which purport to restrict insurance would be of no effect if they are not of the nature specified in subsection (2). The proviso to sub-section (4) is very illustrative. It shows that the insurance company has to pay to third parties but it may recover from the person who was primarily liable to pay. The liability of the insurance company to pay is further emphasized by sub-section (5). This also shows that the insurance company must first pay, then It can recover. If Section 149 is read as a whole it is clear that sub-section (7) is not giving any additional right to the insurance company. On the contrary it is emphasizing that the insurance company cannot avoid liability except on the limited grounds set out in sub-section (2). 18. Now let us consider Section 149(2). Reliance has been placed on Section 149(2)(a)(ii),. As seen, in order to avoid liability under this provision it must be shown that there is a "breach'. As held in Skandia and Sohan Lal Passi cases the breach must be on the part of the insured. We are in full agreement with that. To hold otherwise would lead to absurd results. Just to take an example, suppose a vehicle is stolen. Whilst it is being driven by the thief there is an accident. The thief is caught and it is ascertained that he had no licence. Can the insurance company disown liability ?The answer has to be an emphatic "No". To hold otherwise would be to negate the very purpose of compulsory insurance. The injured or relatives of the person killed in the accident may find that the decree obtained by them is only a paper decree as the owner is a man of straw. The owner himself would be an innocent sufferer. It is for this reason that the legislature, in its wisdom, has made insurance, at least third party insurance, compulsory. The injured or relatives of the person killed in the accident may find that the decree obtained by them is only a paper decree as the owner is a man of straw. The owner himself would be an innocent sufferer. It is for this reason that the legislature, in its wisdom, has made insurance, at least third party insurance, compulsory. The aim and purpose being that an insurance company would be available to pay. The business of the company is insurance. In all businesses there IS an element of risk. Air persons carrying on business must take risks associated with that business. Thus it is eguitable that the business which is run for making profits also bears the risk associated with it. At the same time innocent parties must not be made to suffer or loss. These provisions meet these requirements. We are thus in agreement with what is laid down in the aforementioned cases viz. that in order to avoid liability it is not sufficient to show that the person driving at the time of accident was not duly licensed. The insurance company must establish that the breach was on the part of the insured." 33. The matter with regard to as to whether there has been a fundamental breach so as to afford a grant to insurer and to avoid the liability came up for interpretation in B.V. Nagaraju Vs. Oriental Insurance Co. Ltd. 1996 ACJ 1178. The observations of the Apex Court are quoted below: "7. It is plain from the terms of the insurance poly that the insured vehicle was entitled to carry 6 workmen, excluding the driver. If those 6 workmen when traveling in the vehicle are assumed not to have increased any risk form the point of view of the insurance company or occurring of an accident, how could those added persons be said to have contributed to the causing of it is the poser, keeping apart the load it was carrying. Here, it is nobody's case that the driver of the insured vehicle was responsible for the accident. In fact, it was not disputed that the oncoming vehicle had collided head-on against the insured vehicle, which resulted in the damages. Here, it is nobody's case that the driver of the insured vehicle was responsible for the accident. In fact, it was not disputed that the oncoming vehicle had collided head-on against the insured vehicle, which resulted in the damages. Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle, without the knowledge of owner, cannot be said to be such a fundamental breach that the owner should, ion all events, be denied indemnification. The misuse of the vehicle was somewhat irregular though, but not so fundamental in nature so as to put an end to the contract, unless some factors existed which, by themselves, had gone to contribute to the causing of the accident. In the instant case, however, we find no such contributory factor. In Skandi's case this court paved the way towards reading down the contractual clause by observing as follows: ".. .... When the option is between opting for a view which will relieve the distress and misery of the victims of accidents of their dependants on the one hand and the equally plausible view which will reduce the profitability of the insurer ion regard to the occupational hazard undertaken by it, by way of business activity, there is hardly any choice. The court cannot but opt for the former view. Even if one were to make it .strictly doctrinaire approach, the very same conclusion would emerge In obeisance to the doctrine of reading down the exclusion clause in the light of the 'main purpose' of the provision so that the 'exclusion clause' does not cross swords with the 'main purpose' highlighted earlier. The effort must be to harmonize the two instead of allowing the exclusion clause to snipe successfully at the main purpose. The theory which needs no support is supported by Carter's Breach of Contract vide para 251. To quote: "Notwithstanding the general ability of contracting parties to agree to exclusion clauses which operate to define obligations there exists a rule, usually referred to as the "main purpose rule", which may limit the application of wide exclusion clauses defining a promisor's contractual obligations. To quote: "Notwithstanding the general ability of contracting parties to agree to exclusion clauses which operate to define obligations there exists a rule, usually referred to as the "main purpose rule", which may limit the application of wide exclusion clauses defining a promisor's contractual obligations. For example, In Glynn v. Margetson & Co., (1893) AC 35 , Lord Halsbury, L.C. stated : It seems to me that in construing this document, which is a contract of carriage between the parties, one must in the first instance look at the whole instrument and not at the one part of it only. Looking at the whole instrument, and seeing what one must regard........ .as its main purpose, one must reject words, indeed whole provisions, if they are inconsistent with what one assumes to be the main purpose of the contract.' Although this rule played a role in the development of the doctrine of fundamental breach, the continued validity of the rule was acknowledged when the doctrine was rejected by the House of Lords in Suissee Atlantique Societe'd Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale, (1967) 1 AC 361. Accordingly, wide exclusion clauses will be read down to the extent to which they are inconsistent with the main purpose, or object of the contract." 34. The Division Bench of Uttarakhand High Court in Oriental Insurance Co. Ltd Vs. Sadi Ram 2006 ACJ 2321 has also taken the view that the Insurance Company is liable to pay where the Bus insured was carrying on 41 passengers including driver and conductor. Relevant observations are quoted below: "11. The issues of violation of terms and conditions of insurance policy and that the driver of the bus have not valid driving licence have been raised by the appellant-respondent. Therefore, the burden of proof lies upon the insurance company. Learned Claims Tribunal framed issues on both these points but the appellant has not lead any evidence in this connection. The driver of the bus has produced a copy of driving licence before the Claims Tribunal and the Claims Tribunal found that the driving licence was valid and genuine. However, if the owner of the vehicle has flouted the terms and conditions of insurance policy or the driver has no valid driving licence, the liability of the insurance company towards the third party does not get avoided. However, if the owner of the vehicle has flouted the terms and conditions of insurance policy or the driver has no valid driving licence, the liability of the insurance company towards the third party does not get avoided. The insurance company on proof that owner of vehicle was aware of fact that licence was fake, can however, recover the amount from the insured. As held by the Supreme Court in the case of United India Insurance Co. Ltd. v. Lehru, 2003 ACJ 611 (SC), as under: "Now, let us consider section 149(2). Reliance has been placed on section 149(2)(a)(ii). As seen in order to avoid liability under this provision it must be shown that there is a breach. As held in Skandia's case, 1987 ACJ 411 (SC) and Sohan Lal Passi's case, 1996 ACJ 1044 (SC), the breach must be on part of the insured. We are in full agreement with that. To hold otherwise would lead to absurd results. Just to take an example, suppose a vehicle is stolen. Whilst it is being driven by the thief there is an accident. The thief is caught and it is ascertained that he had no licence. Can the insurance company disown liability? The answer has to be an emphatic 'No'. To hold otherwise would be to negate the very purpose of the compulsory insurance. The injured or relatives of person killed in the accident may find that the decree obtained by them is only paper decree as the owner is a man of straw. The owner himself would be an innocent sufferer. It is for this reason that the legislature, in its wisdom, has made insurance, at least third party insurance compulsory. The aim and purpose being that an insurance company would be available to pay. The business of the company is of insurance. In all businesses there is an element of risk. All persons carrying on business must take risks associated with that business. Thus it is equitable that the business which is run for making profits also bears the risk associated with It. At the same time innocent parties must not be made to suffer a loss. These provisions meet these requirements. We are thus in agreement with what is laid down in aforementioned cases viz. Thus it is equitable that the business which is run for making profits also bears the risk associated with It. At the same time innocent parties must not be made to suffer a loss. These provisions meet these requirements. We are thus in agreement with what is laid down in aforementioned cases viz. that in order to avoid liability it is not sufficient to show that the person driving at the time of accident was not duly licensed. The insurance company must establish that the breach was on the part of the insured. " 12. The Supreme Court in the case National Insurance Co. Ltd. vs. Swaran Singh, 2004, ACJ 1 (SC), has held as under: "( 102) the summary of our findings to the various issues as raised in these petitions are as follows : (iii) The breach of policy condition e.g. disqualification or the driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(jj) of section 149, have to be proved to have been committed by the insured for avoiding liability by (he insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards the insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by a duly licensed driver or one who was not disqualified to drive at the relevant time. " 13. However, in the present appeals, the insurance company has utterly failed to establish that the owner and driver of the vehicle met with accident have flouted the terms and conditions of the insurance policy and as such the appellant is not entitled to recover the amount of compensation from the insured, i.e., the owner of the vehicle ." 35. In New India Assurance Co. Ltd. Vs. Ratibai and others, 2007 ACJ 1119, Jabalpur High Court while interpreting the provisions of Section 149(2)(a)(i)(c) has observed as under: "4. In New India Assurance Co. Ltd. Vs. Ratibai and others, 2007 ACJ 1119, Jabalpur High Court while interpreting the provisions of Section 149(2)(a)(i)(c) has observed as under: "4. With respect to the overloading, it is clear that there is no evidence on record to come to the conclusion that it has contributed or was the factor to the accident in question; finding is that driver drove the jeep in a rash and negligent manner; until the overloading itself is the cause of accident, in our opinion, it does not constitute substantial breach on the part of the owner. Apart from that there is no evidence on record to show that owner was having the knowledge of such a breach of condition of carrying more humans than permitted under the policy. This question has been considered by the Apex Court in B.V. Nagaraju v. Oriental Insurance Co. Ltd., 1996 ACJ 1178 (SC), in which the Apex Court has followed the decision in Skandia Insurance Co. Ltd. v. Kolilaben Chandravadan, 1987 ACJ 411 (SC), in view of the fact that there was "breach of carrying humans in goods vehicle more than the number permitted in terms of the insurance policy, it was laid down that the same can not be said to be such fundamental breach so as to afford ground to the insurer to deny indemnification" unless there were some factors which contributed to the causing of the accident. The Supreme Court has laid down in B.V. Nagaraju, 1996 ACJ 1178 (SC), that exclusion term of the insurance policy must be read down to serve the main purpose of it to indemnify the insured." 36. As will appear from the aforesaid decisions of the Apex Court as well as other Courts, the main idea behind the insurance is to indemnify the insured and the breach as contained under Section 149(2)(a) or (c) must be to the extent that it has contributed to the accident. The aforesaid ingredients being missing, therefore, it cannot be said that Insurance Company has exonerated from the liability to pay the amount to the insured. The aforesaid judgments have also been relied in M. Annadavalliam V. Aravind Eye Hospital 2004 ACJ 140 by the Madras High Court, where it has been observed as under: "19. The aforesaid ingredients being missing, therefore, it cannot be said that Insurance Company has exonerated from the liability to pay the amount to the insured. The aforesaid judgments have also been relied in M. Annadavalliam V. Aravind Eye Hospital 2004 ACJ 140 by the Madras High Court, where it has been observed as under: "19. Coming to the case in hand, as many as 16 persons were taken in the ill-fated van, when the terms and conditions of the policy prescribe or restrict the maximum number as 14. From the cases cited supra and other rulings, It could be seen that in most of the cases, the driver took additional passengers without the knowledge of the owner that it insured and in the rest, it is not clear as to whether the owner had knowledge. As far as the present case is concerned, the insured is non else than the Aravind Eye Institute. It cannot be said, in this case that the driver took two extra persons without the knowledge of the insured or to benefit him in any manner. Then the question is, whether it would make any difference. We may straightaway say, the answer is in the negative. Merely by lifting a person or two, it cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. The breach of the condition of the policy was somewhat irregular, though, but not so fundamental in nature so as to put an end to the contract, unless some factors existed, which, by themselves had gone to contribute to the causing of the accident. If the insurance company is able to prove that it is because of the presence bf additional persons who were allowed to occupy the vehicle the accident occurred, the position would be different. Consequently, we hold that even in cases where more passengers are taken with or without the knowledge or implied consent or even consent of the owner, unless the insurance company is able to prove that the accident took place only because of such act (taking more passengers) the insurance company will be liable to make good the loss/compensation. Consequently, we hold that even in cases where more passengers are taken with or without the knowledge or implied consent or even consent of the owner, unless the insurance company is able to prove that the accident took place only because of such act (taking more passengers) the insurance company will be liable to make good the loss/compensation. It has to be noted that in the case on hand, it is not the contention of the insurance company that the accident had occurred because two persons, over and above the prescribed limit in the policy, were traveling at the relevant time in the vehicle. At this juncture, we may refer to a passage form the judgment of the Supreme Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan, 1987 ACJ 411 (SC), wherein the court observed as under: "Ordinarily it is not the concern of the legislature whether the owner of the vehicle insures his vehicle or not. If the vehicle is not insured any legal liability arising on account of third party risk will have to be borne by the owner of the vehicle. Why then has the legislature insisted on a person using a motor vehicle in a public place to insure against third party risk by enacting section 94 ? Surely the obligation has not been imposed in order to promote the business of the insurers engaged in the business of automobile insurance. The provision has been inserted in order to protect the members of the community traveling in vehicle or using the roads from the risk attendant upon the user of motor vehicles on the roads. The law may provide for compensation to victims of the accidents who sustain injuries in the course of the automobile accident or compensation to the dependants of the victim in the case of a fatal accident. However, such a protection would remain a protection on paper unless there is a guarantee that the compensation awarded by the courts would be recoverable from the persons held liable for the consequences of the accident. A court can only pass an award or a decree. It cannot ensure that such an award or decree results in the amount awarded actually recovered, from the person held liable who may.:… .have the resources. The exercise undertaken by the law courts would then be an exercise in futility. A court can only pass an award or a decree. It cannot ensure that such an award or decree results in the amount awarded actually recovered, from the person held liable who may.:… .have the resources. The exercise undertaken by the law courts would then be an exercise in futility. And the outcome of the legal proceedings which by the very nature of things involve the time cost and money cost invested from the scarce resources of the community would make a mockery of the injured victims, or dependants of the deceased victim of the accident, who themselves are obliged to Incur not inconsiderable expenditure of time, money and energy in litigation." 37. In the light of the aforesaid decisions, the Insurance Company has failed to prove that the accident occurred due to over-loading, therefore, findings recorded by the Claims Tribunal while deciding the Issue NO.4 regarding recoverable rights on account of the breach of the policy on the ground of over-loading cannot be allowed to stand. No recoverable rights, therefore, can be granted to the Insurance Company as contained under the proviso to Subsection (4) of Section 149 of the Motor Vehicles Act. 38. In view of the above, the findings of the claims tribunal by which recoverable right has been given to the insurer under the proviso to Sub-section (4) of Section 149 of the Motor Vehicles Act is set aside. Rest of the findings are confirmed. 39. Consequently, Appeal partly succeeds and is allowed with costs.