Advocates:
PRAMOD DAYALMOHAN PANDEY

http://JUDIS.NIC.IN

SUPREME COURT OF INDIA

Page 1 of 6

CASE NO.:

Appeal (civil) 1731 of 2006

PETITIONER:

National Insurance Co. Ltd.

RESPONDENT:

Kusum Rai & Ors.

DATE OF JUDGMENT: 24/03/2006

BENCH:

S.B. Sinha & P.K. Balasubramanyan

JUDGMENT:

J U D G M E N T

(Arising out of SLP(C) No.14306 of 2003)

S.B. SINHA, J :

Leave granted.

Respondent No. 3 herein is owner of a jeep bearing registration No.

BR 03 P 9011. The said vehicle admittedly was being used as a taxi and,

thus, a commercial vehicle. One Ram Lal was working as a Khalasi in the

said taxi. He used to drive the said vehicle sometimes. He had a driving

licence. Driving licence, however, was granted to him for driving a Light

Motor Vehicle. The said taxi met with an accident on 14.8.2000 at about 1

p.m. as a result whereof a girl aged about 12 years, Km. Anjali Rai, died.

On an allegation made in that behalf that the said taxi was being

driven rashly and negligently by the aforementioned Ram Lal, a claim

petition in terms of Sections 163A and 166 of the Motor Vehicles Act, 1988

(for short "the Act") was filed by the First and the Second Respondents

herein. The said taxi admittedly was insured with the Appellant herein. One

of the issues raised in the said proceeding was as to whether the driver of the

said jeep was having a valid and effective licence. Another question which

arose was as to whether the said Ram Lal was driving the said vehicle.

The learned Tribunal did not go into the said question. It inter alia

held that the said Ram Lal had been driving the said vehicle having regard to

the fact that he had been shown as the accused in the criminal case.

However, as regard the question as to whether by permitting the said Ram

Lal to drive the said vehicle, the Respondent No. 3 herein violated the terms

and conditions of contract of licence, the learned Tribunal relying on or on

the basis of the decision of this Court in New India Assurance Co., Shimla v.

Kamla and Others [(2001) 4 SCC 342] held that the Insurance Company

cannot get rid of its third party liability as the said question arises only

between the owner of the vehicle and the insurance company. It was further

held:

"Insurance Company can recover this amount from

owner of vehicle. This legal proposition is fully

applicable in this matter. So, Issue No. 3 is

decided in favour of Petitioners."

The appeal preferred thereagainst by the Appellant herein before the

High Court was dismissed on the premise that no appeal was maintainable

wherefor reliance was placed by the High Court on a decision of this Court

in National Insurance Company Ltd. Chandigarh v. Nicolletta Rohtagi and

Others [JT 2002 (7) SC 251]. As regard the purported statutory liability of

http://JUDIS.NIC.IN

SUPREME COURT OF INDIA

Page 2 of 6

the Appellant, it was held:

"\005the mere fact that there was violation of the

terms and conditions subject to which the

insurance policy had been issued, cannot have the

effect of exonerating the insurer from the statutory

liability cast upon him in this regard to pay the

amount to the third party victim."

It was further held:

"It will, therefore, be open to the insurer \026

appellant to initiate an appropriate proceeding for

the refund of the amount paid by it to the claimants

and establish the breach of the terms and

conditions subject to which the insurance policy

had been issued."

Hence, this appeal.

The contention raised on behalf of the Appellant was that the High

Court was palpably in error as violation of the terms and conditions of the

contract of insurance is a matter which comes within the purview of any of

the ’statutory defences’ which can be raised by an insurer under sub-section

(2) of Section 149 of the Act. The statutory bar as regards raising a defence

on the part of the insurance company is confined to the quantum of damages

only.

The learned counsel app