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B.N.KIRPAL, S.B.MAJMUDAR
United India Insurance Company LTD. – Appellant
Versus
Gian Chand – Respondent
Question 1? Question 2? Question 3?
Key Points: - The Insurance Company’s liability depends on whether the insured handed over the vehicle to an unlicensed driver, triggering or negating the exclusion under Section 96(2)(b) of the Motor Vehicles Act, 1939. (!) (!) (!) - Distinction between two fact patterns: (a) breach by insured who permits an unlicensed driver; (b) insured hands vehicle to a licensed driver who then allows an unlicensed driver to drive, affecting exoneration under the exclusion clause. (!) (!) - Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan and Ors. (1959) held no breach when a licensed driver governs the vehicle, even if an unlicensed person assists; Kashiram Yadav and New India Assurance Co. Ltd. v. Mandar Madhav Tambe align differently on when exoneration applies. (!) (!) (!) - The High Court erred in not applying the Skandia ratio given the facts that the insured handed over the vehicle to an unlicensed driver. (!) (!) - The Court ultimately held that the Insurance Company is not liable to meet the third-party claim when the insured handed over the vehicle to an unlicensed driver; the claim may be pursued against the driver and insured persons. (!) (!)
JUDGMENT
S.B. Majmudar, J.-Leave granted.
At the SLP stage itself, by order dated 25th March, 1997, this Court had directed as under :
"Delay condoned. Issue Notice for final disposal of the SLP in the light of decision of this Court in New India Assurance Co. Ltd. v. Mandar Madhav Tambe and Ors. (1996) 2 SCC 328. Notice on application for stay wherein there shall be ad-interim stay of the order of the High Court as against the petitioner, Insurance Co. only, till further orders".
2. Pursuant to the notice for final disposal issued in the SLP, respondent Nos. 1 and 9 who are duly served, have not thought it fit to appear and contest these proceedings. The contest now, therefore, survives between the appellant-Insurance Company on the one hand and the claimants who are represented by learned counsel Mr. H.K. Puri. Having heard learned counsel for contesting parties, we are disposing of this appeal finally by this judgment.
3. A few facts leading to this appeal may be stated at the outset. A car which was insured by respondent No. 9 - original owner, with the appellant-Insurance Company against third party risk, met with an accident on 1st January, 1988, at about 10.30 a.m. In the said a
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