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CASE NO.:

Appeal (civil) 6178 of 2004

PETITIONER:

National Insurance Co. Ltd.

RESPONDENT:

Chella Bharathamma & Ors.

DATE OF JUDGMENT: 21/09/2004

BENCH:

ARIJIT PASAYAT & C.K. THAKKER

JUDGMENT:

J U D G M E N T

(Arising out of SLP (C) No.13208/2003)

(With C.A.6179/2004 @SLP(C) No. 13210/2003)

ARIJIT PASAYAT, J.

Leave granted.

National Insurance Company limited (hereinafter referred to as

the ’insurer’) calls in question legality of the judgment rendered by a

learned Single Judge of the Andhra Pradesh High Court holding the

insurer to be liable for indemnifying the award of compensation.

Background facts in nutshell are as follows :

Three persons were traveling in an auto rickshaw which met with

an accident on 9.5.1992. Two persons lost their lives while one was

seriously injured. Claim petitions were filed by the legal

representatives of the two deceased persons while the injured filed

separate petition claiming compensation in terms of Section 166 of the

Motor Vehicles Act, 1988 (in short the ’Act’) The auto rickshaw in

question belonged to Challa Atchayya (hereinafter referred to as the

’insured’). The insurer resisted the claim on the ground that the

insured had not obtained permit to ply the vehicle and therefore in

terms of the policy of the insurance the insurer had no liability. The

Motor Vehicle Accident Claims Tribunal, Krishna at Vijayawada (in short

the ’Tribunal’) accepted the plea. It however, held that the insured

was liable to pay compensation which was fixed at Rs. 1,24,000/- in the

case of the death while in case injured’s claim a sum of Rs. 2,000/-

was directed to be paid. The judgment was challenged in appeal before

the Division Bench of the High Court of Andhra Pradesh at Hyderabad

questioning the correctness of the view regarding non-liability of the

insurer. The High court by the impugned judgment held that the insurer

was liable to indemnify the award.

In support of the appeal learned counsel for the appellant\026

insurer submitted that the High Court has lost sight of the fact that

plying the vehicle without requisite permit is a breach of a specific

condition of the policy and, therefore, the insurer had no liability.

It was pointed out that Section 149 of the Act deals with the defences

available to the insurer.

Reference was also made to Section 66 of the Act relating to the

necessity for permits. The High Court’s view that since the vehicle was

subject-matter of insurance and the policy was in operation; insurer’s

liability is really of no consequence. The defence available to the

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insurer is when the policy subsists and stress of the High Court on

that is really beside the point.

Per contra, learned counsel for the respondent-claimants

submitted that in one case at hand two young children of the deceased

were the beneficiary of the award. The widow of the deceased, during

the pendency of the appeal before this Court, has also expired. In one

of the cases, old parents of the deceased are the claimants. In this

view of the matter, considering the small amounts awarded, this is not

a fit case for interference.

Section 149(2)(a) (i) relates to a vehicle not covered by a

permit to ply for hire or reward. Section 149(2) reads as follows :

" 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 of 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 whom notice of the bringing of any

such proceedings is so given shall be entitled to be made a

party thereto a