JUDGMENT

ARIJIT PASAYAT, J.

Leave granted.

2. 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.

3. 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 assurer 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 injureds 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.

4. In support of the appeal learned counsel for the appellant-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.

5. Reference was also made to Section 66 of the Act relating to the necessity for permits. The High Courts view that since the vehicle was subject-matter of insurance and the policy was in operation; insurers liability is really of no consequence. The defence available to the insurer is when the policy subsists and stress of the High Court on that is really beside the point.

6. 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.

7. 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 and to defend the action on any of the following grounds, namely:-

(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:-

(i) a condition excluding the use of the vehicle -

(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or

(b) for organized racing and speed testing, or

(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport