The central legal point established in the judgment is that insurers are bound to satisfy judgments and awards against the insured owner unless their defense falls within the grounds stipulated in section 149(2) of the Motor Vehicles Act, 1988.

( 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 dependants of the deceased victims, before the respective motor Accidents 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 Exh. 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 the 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. (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