The liability of the insurance company in cases where the vehicle is being run without a valid permit and in violation of the conditions stipulated in the Insurance Policy.

JUDGMENT

Navin Chawla, J. (Oral)

CM APPL. 34730/2023 (Exemption)

1. Allowed, subject to all just exceptions.

MAC.APP. 344/2023

2. This appeal has been filed challenging the Award dated 06.04.2023 passed by the learned Motor Accidents Claims Tribunal, (East District), Karkardoom Courts, New Delhi (hereinafter referred to as the `Tribunal') in MAC Case No.22/17, titled Jugnu Kumari v. Bano & Ors..

3. The challenge to the Impugned Award is to a limited extent that as the offending vehicle was being driven without a valid permit, the appellant is not liable to pay the compensation awarded by the Impugned Award to the claimants and that the learned Tribunal has erred in directing so and reserving only a right to recover the paid amount from the owner and driver of the offending vehicle.

4. The learned counsel for the appellant placing reliance on the judgment of the Supreme Court in National Insurance Co. Ltd. v. Vidhyadhar Mahariwala & Ors., (2008) 12 SCC 701, submits that where the vehicle is being run without a valid permit and in violation of the conditions stipulated in the Insurance Policy, the appellant cannot be made liable to pay the compensation; liability remains of the owner of such offending vehicle.

5. I am unable to agree with the submission made by the learned counsel for the appellant.

6. In National Insurance Co. Ltd. v. Swaran Singh & Ors., (2004) 3 SCC 297, the Supreme Court interpreting Section 149 of the Motor Vehicles Act (as applicable then), has observed as under:

"81. The submissions made on behalf of the petitioner may now be noticed. According to the learned counsel, sub-section (4) of Section 149 deals with the situation where the insurer in the policy purports to restrict the insurance of the persons insured thereby by reference to any condition other than those in clause (b) of sub-section (2) of Section 149 and in that view of the matter no liability is covered for driving of a vehicle without licence or fake licence. The submission ignores the plain and unequivocal expression used in sub-section (2) of Section 149 as well as the proviso appended thereto. With a view to construe a statute the scheme of the Act has to be taken into consideration. For the said purpose the entire Act has to be read as a whole and then chapter by chapter, section by section and word by word. [See Reserve Bank of India etc. vs. Peerless General Finance and Investment Co. Ltd. and others, [(1987) 1 SCC 424 Para 33].

82. Proviso appended to sub-section (4) of Section 149 is referable only to sub-section (2) of Section 149 of the Act. It is an independent provision and must be read in the context of Section 96(4) of the Motor Vehicles Act, 1939. Furthermore, it is one thing to say that the insurer will be entitled to avoid its liability owing to breach of terms of a contract of insurance but it is another thing to say that the vehicle is not insured at all. If the submission of the learned counsel for the petitioner is accepted, the same would render the proviso to sub-section (4) as well as sub-section (5) of Section 149 of the Act otiose, nor any effective meaning can be attributed to the liability clause of the insurance company contained in sub-section (1). The decision in Kamla's case (supra) has to be read in the aforementioned context.

83. Sub-section (5) of Section 149 which imposes a liability on the insurer must also be given its full effect. The insurance company may not be liable to satisfy the decree and, therefore, its liability may be zero but it does mean that it did not have initial liability at all. Thus, if the insurance company is made liable to pay any amount, it can recover the entire amount paid to the third party on behalf of the assured. If this interpretation is not given to the beneficent provisions of the Act having regard to its purport and object, we fail to see a situation where beneficent provisions can be given effect to. Sub-section (7) of Section 149 of the Act, to which pointed attention o