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2015 DIGILAW 1178 (KAR)

MOOGANNA v. IFFCO TOKIO GENERAL INSURANCE CO LTD

2015-10-13

H.G.RAMESH

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Judgment H.G. Ramesh, J. Whether specifying the conditions stated in Section 149(2)(a) of the Motor Vehicles Act, 1988 in the insurance policy is a condition precedent to raise the defence of breach of any of those conditions? This is the question that requires determination in these appeals. The question is answered in the affirmative. 2. These three appeals by the claimants are directed against the judgment and award dated 20.10.2010 passed in MVC Nos. 8580/2008, 8773/2008 and 8579/2008 respectively. I have heard learned Counsel for the appellants in all the three appeals and learned Counsel for respondent No.1 Insurance Company in MFA No.2096/2011. Learned Counsel appearing for the respondents in MFA Nos.2097/2011 and 1904/2011 have remained absent. 3. The sole contention urged by the learned Counsel for the appellants in all the three appeals is that the Motor Accidents claims Tribunal (‘the Tribunal’) has erred in law in absolving respondent No.1Insurer of the liability to pay the award amounts on the ground that the autorickshaw cab was used contrary to a permit condition inasmuch as it was used beyond the permitted area at the time of accident. In other words, the Tribunal has absolved the insurer of the liability on the ground of breach of the condition stated in Section 149(2)(a)(i)(c) of the Motor Vehicles Act, 1988 (‘the Act’). 4. It is relevant to refer to the following reasoning of the Tribunal: “24. …………………………………………………………………………………….. the evidence of PW.1 and RW.1 and 2 and also EXs.R.1 and 3 which clearly reveals that though the permit is given by the concerned RTO Authority to ply the said vehicle within 25 Kms of its radius, the driver of the vehicle took the same beyond 25 Kms from Bangalore city and therefore he has clearly violated the terms and conditions of the permit …………………………………………………………………… since the owner of the vehicle has violated the terms and conditions of the permit issued by the concerned R.T.O and in the light of the decision relied upon by the learned counsel for the respondent No.1 insurance company and also considering the over all evidence of the petitioner and respondents and materials placed on record, I am of the view that the respondent NO.1 is not liable to pay the compensation and respondent NO.2 who is the owner of the offending vehicle is alone held liable to pay the compensation to the petitioners in all the three petitions.” 5. Section 149(2) of the Act to the extent it is relevant herein reads as follows: “149. Duty of insurers……………………………………... (1) ……………………………………………………………………….. (2) No sum shall be payable by an insurer under subsection (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment of 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 sidecar 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 (b) ………………………………………………………………… (Emphasis supplied) 6. As could be seen from the photocopy of the insurance policy marked in evidence as Ex.R2, no condition as stated in Section 149(2)(a)(i)(c) of the Act is specified therein. In the absence of a condition in the insurance policy in terms of Section 149(2)(a)(i)(c) of the Act, an insurer cannot be absolved of the liability relating to the risk covered under the policy on the ground that the vehicle was used for a purpose not allowed by the permit. 7. In the absence of a condition in the insurance policy in terms of Section 149(2)(a)(i)(c) of the Act, an insurer cannot be absolved of the liability relating to the risk covered under the policy on the ground that the vehicle was used for a purpose not allowed by the permit. 7. Sri O. Mahesh, learned Counsel for the insurance Company submitted that the defence available under Section 149(2)(a)(i)(c) of the Act is a defence available in law and there is no need to specify the said condition in the policy. The contention is contrary to the plain language of Section 149(2)(a) of the Act. 8. A plain reading of Section 149(2)(a) of the Act will show that unless the conditions stated in Section 149(2)(a) of the Act are specified in the policy, no defence of breach of any of those conditions is available to an insurer. Hence, specifying the conditions stated in Section 149(2)(a) in the Insurance Policy is a condition precedent to raise the defence of breach of any of those conditions. 9. As the insurance policy does not contain the condition stated in Section 149(2)(a)(i)(c) of the Act, the Tribunal has erred in absolving the insurance company of the liability to pay the award amounts. The Tribunal has failed to examine as to whether the Insurance policy contained the condition stated in Section 149(2)(a)(i)(c) of the Act. Accordingly, dismissal of the claim petitions by the Tribunal as against the Insurance company is set aside. Respondent No.1 Insurance Company is held liable to pay the award amounts jointly and severally along with the owner of the vehicle respondent No.2. The impugned judgment and awards stand modified accordingly.