The Ceylon Insurance Co., Ltd. V. Richard Et Al

1951 Present: Gratiaen J. and Gunasekara J.

THE CEYLON INSURANCE CO., LTD., Appellant, and
RICHARD et al, Respondents

S. C. 374-D. C. Colombo, 18,823
 

Motor Gar Ordinance, No. 45 of 1938-Part 8-lnsurance against third party risks-Scope of insurer's liability to third party-Restrictive and excepted conditions in policy-Breach of excepted condition-Action for declaration of non-liability- Statutory rights and obligations of injured party-Requirement of prescribed notice to injured party-Sections 54, 63, 69, 75, 127, 128, 130, 133, 134, 137 138.

In an action instituted under Section 137 of the Motor Car Ordinance by an insurer to obtain a declaration of non-liability for breach of an excepted condition in a policy of insurance in respect of third party risks issued in conformity with the requirements of Part 8 of the Motor Car Ordinance- . .

Held: (i) As between insurer and insured, their rights and obligations inter se are measured solely by the terms of their contract, so that the contractual duty of the former to indemnify the latter may be avoided on any lawful ground" which the parties might mutually agree upon

(ii) As far as the injured party is concerned, however, his light against the insurer to claim direct satisfaction of a decree entered in his favour against the insured is unaffected by the terms of the contract itself unless the insurer is protected by a declaration (under section 137) that there has been a breach of a condition in the policy which falls within one or other of the categories of excepted conditions enumerated in Section 130 (4).

(iii) A person who drives an insured motor car of a weight which is in excess of that which is specified in his certificate of competence is not " the holder of a certificate of competence " within the meaning of Section 130 (4) (c) (ii) of the Motor Car Ordinance. '

(iv) If an insurer desires, by obtaining a declaratory decree against the insured under Section 137, to escape his statutory obligations towards the injured third party under Section 133 as well, he must, within the statutory period fixed by the proviso, give to the third party a notice specifying the particular condition a breach of which is relied on ; and no breach other than that so specified can be relied on in order to escape the statutory obligation imposed by Section 133.

(v) If no such notice or if a defective notice (in which no particulars are specified) is furnished to the third party, the latter's statutory right to obtain satisfaction of his decree under Section 133 direct from the insurer would be unaffected by any declaration of non-liability which the insurer may obtain against the insured in terms of Section 137 ; in that event, the insurer must first discharge his obligation under Section 133, and then seek his remedy against the insured under Section 138.

APPEAL from a judgment of the District Court, Colombo.

Defendant was the owner of a motor car which was 23 cwts. 3 quarters in weight. Plaintiff Company issued to the defendant in respect of this motor car a comprehensive policy of insurance, covering third party risks. It was, however, a condition of the policy that the Company should not be liable in respect of any claim arising while the vehicle was "being driven by .... an 'excluded driver'" as defined in the Schedule to the policy. The expression " excluded driver " was defined in the Schedule and included " any person who is not the holder of a certificate of competence unless he has held and is not disqualified from obtaining such certificate". Subsequently, when the car was being driven on the public highway by the defendant's employee, it met with an accident in consequence of which the added defendant sustained certain injuries. It was established that on the day of the accident the driver did not possess, and had never possessed, a certificate of competence authorising h

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