Even in cases of wilful breach of policy conditions, the Insurance Company is obligated to satisfy the award and can recover the amount from the insured.

1. The present appeal arises out of the award passed by the learned Principal Additional District Judge, MACT, Salem in MCOP.No.1194 of 2006 dated 10.11.2008, whereby the Tribunal awarded a sum of Rs.4,94,500/-to the claimants who are the legal representatives of the deceased Kasinathan who was 39 years old at the time of accident and was working as lorry driver cum agriculturist.

2. The Tribunal held that the owner and the Insurance Company/ appellant herein are jointly and severally liable to pay the above said compensation.

3. The appellant/Insurance Company has not seriously challenged the findings of the Tribunal on the point of negligence fastened on the part of the driver and quantum of compensation awarded. The challenge is on the ground that there is a breach of condition of policy as the vehicle in question was plying on public road without having obtained a certificate of registration and without displaying the registration number. It was contended by the learned counsel for the appellant that the vehicle ought not to have been plied in the absence of certificate of registration and as such there is breach of policy and therefore, the appellant/Insurance Company is not liable to pay compensation. It was contended that the learned Tribunal has committed an error in not exonerating the Insurance Company from the liability to pay compensation.

4. The record indicates that the offending vehicle namely, a Tractor was having a valid policy insured with the appellant herein. It is not in dispute that the said vehicle was driven without a certificate of registration and the registration number was not displayed. The appellant/Insurance Company had placed on record adequate material which go to establish that the vehicle was running without a certificate of registration. The Insurance Company has examined two witnesses R.W.1 and R.W.2 and marked Ex.R1 to R6 to prove the said fact.

5. Section 39 of Motor Vehicle Act states as follows:-

"No person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place unless the vehicle is registered in accordance with this Chapter and the certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner."

6. The evidence brought on record through Exs.B4 to B6 is to the effect that the vehicle in question was plied without registration and the driver was fined to Rs.2500/-for having plied the vehicle without registration certificate. Having known that the vehicle was not registered and due registration certificate has not been obtained in accordance with Section 39 of the Motor Vehicles Act, the owner of the vehicle has permitted the driver to ply the vehicle on road thus committed breach of policy condition. Therefore, the findings of the Tribunal in this regard fastening the liability on the Insurance Company is unsustainable.

7. Now, it would be appropriate to refer to the judgments which have adopted the line of reasoning that irrespective of the wilful breach of the terms and conditions of policy, it would be the obligation of the insurer to satisfy the award and then recover the amount paid, from the insured and the driver. I would first refer to a three Judge Bench decision in Sohanlal Passi Vs. P.Sesh Reddy [1996 ACJ 1044 (SC)] wherein the Hon'ble Supreme Court referred to the earlier judgment in Skandia Insurance Company Ltd., Vs. Kokilaben Chandravadan [1987 ACJ 411 (SC)]. In New India Assurance Company Ltd., Vs. Kamla [2001 ACJ 843 (SC)] it was held that even when wilful breach is proved, the Insurance Company has to first satisfy the award. In the later judgment in Swaran Singh case [2004 ACJ 1 (SC)], it has been held that the Insurance Company has the liability to satisfy the award vis-a-vis third party and to recover the compensation in case the breach of the insurance policy is