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1997(8) Supreme 208
SUPREME COURT OF INDIA
S.B. Majmudar and B.N. Kirpal, JJ.
United India Insurance Co. Ltd. -Appellant
versus
Shri Gian Chand & Ors. -Respondents
Civil Appeal No. 6081 of 1997
(Arising out of S.L.P. (C) No. 7198 of 1997)
Decided on 2.9.1997
Counsel for the Parties :
For the Appellant : P.P. Malhotra, Sr. Advocate, Vineet Malhotra, Shailendra Sharma, Naresh K. Sharma, Advocates.
For the Respondents : Rajesh Srivastava, Ujjwal Banerjee and H.K. Puri, Advocates.
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 accident, the deceased, who was going on a scooter, got fatally injured. The contesting respondents are the claimants, being dependents of deceased. They filed a claim for compensation before the Motor Accident Claims Tribunal II, Una, in the State of Himachal Pradesh. The contention of the respondents-claimants was that the vehicle was driven by the driver, respondent No. 1 herein, in a rash and negligent manner and because of such driving the fatal accident occurred to their bread winner. The defence of the owner of the vehicle, viz., respondent No. 9 was that he had already sold and handed over this vehicle to respondent No. 1 and therefore, he had nothing to do with this claim. Respondent No. 1, on the other hand, submitted before the Tribunal by filing his written statement and also by entering into witness box, that he had nothing to do with the vehicle. He neither purchased it nor had he driven the same. However, he stated that he had no licence to drive the vehicle at the relevant time when the accident occurred. So far as respondent No. 9, who is the insured, was concerned, he did not think it fit to enter the witness box. The defence of the appellant-Insurance Company was that whatever may be the liability of respondent Nos. 1 and 9 regarding the claim for compensation, so far as the appellant-Insurance Company is concerned, it stood exonerated by the exclusion clause in the Insurance Policy which did not permit the insured to hand over the vehicle for purpose of driving to an unlicensed driver. The Tribunal after recording evidence came to the conclusion that the accident was caused due to rash and negligent driving of the car by respondent No. 1, who was on the wheel at the relevant time. It did not believe the case of respondent No. 9 that he had sold and handed over the vehicle to respondent No. 1 and had nothing to do with the vehicle. This finding was reached especially in view of the fact that respondent No. 9 did not think it fit to come to the witness box to support his case. Consequently the claim for compensation was computed and was made payable by respondent Nos. 1 and 9. However, so far as the Insurance Company was concerned, the Tribunal took the view that the appellant-Insurance Company got exonerated from its liability on account of the fact that respondent No. 9, the insured, had permitted the vehicle to be driven by an unlicensed driver, viz., respondent No. 1 and therefore, he had committed breach of the relevant term of the Policy and that entitled the Insurance Company to get the benefit of the exclusion clause available as a defence to the Company under Section 96(2)(b) of the Motor Vehicles Act, 1939. In the result, the Tribunal while awarding Rs. 58,400/- as compensation, in favour of the respondents-claimants, again
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