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Skandia Insurance Co. Ltd. Versus Kokilaben Chandravadan & Ors.

1987 (4) TMI 487 - SUPREME COURT OF INDIA

Civil Appeal No. 1306 (N) of 1973. - Dated:- 1-4-1987 - Thakkar M.P. And Ray B.C., JJ G. Ramaswamy, Additional Solicitor General, H.K. Puri and S.C. Dhanda for the Appellant. M.V. Goswami for the Respondents. JUDGMENT: Thakkar, While in some States1 a widow of a victim of a motor vehicle accident can recover the amount of compensation awarded to her from the Insurance Company, in a precisely similar fact-situation she would be unable to do so, in other States2, conflicting views having been take .....

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s not duly licensed or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification," and that such exclusion was permissible in the context of Section 96(2)(b)(ii)3 for claiming immunity against the obligation to satisfy the judgments against the insured in respect of third party risks. The facts are not in dispute. The Claims Tribunal as also the High Court have concurred with the findings which are recorded in the following pass .....

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a Pradesh, Orissa. 3. "96. Duty of insurers to satisfy judgments against persons insured in respect of third party risks-(1) If, after a certificate of insurance has been issued under sub-section (4) of Section 95 in favour of the person by whom a policy has been effected, judgments in respect of any such liability is required to be covered by a policy under clause (b) of sub-section (1) of Section 95 (being, a liability covered by the terms of the policy) is obtained against any person ins .....

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accident, the owner of the car viz. the insured was held vicariously liable along with the driver and the cleaner." The view taken by the High Court has been summed up as under: "In the present case there is not an allegation even that the insurer had at any time committed a breach of this condition. The insured has never permitted the cleaner to drive on the fatal occasion. The insured has permitted only the driver who is admittedly the licenced driver. It is the driver s negligence i .....

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vicarious liability arises because of this principle of social justice and not because the owner committed any breach of the policy condition. The owner in the present case never gave permission to this cleaner to drive and, therefore, the f.n. 3 contd. 2. No sum shall be payable by an insurer under sub-section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the Court of the bringing of the p .....

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n or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or XXXX" owner even though he had become liable by reason of his vicarious liability he could not be held guilty of the breach of the contractual condition embodied in the policy of insurance. Therefore, the insurer cannot plead any exemption on the ground that the owner had committed breach of the specified cond .....

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occurred when an unlicensed person was at the wheels the Insurance Company would be exonerated from the liability. The validity of this argument advanced in order to assail the view taken by the High Court has to be tested in the light of the provisions contained in Sections 96(1) and 96(2)(b)(ii) of the Motor Vehicles Act (Act). But before doing so a brief survey of the decisions of the High Courts may be usefully made. Reliance is placed on behalf of the appellant on Kripa Natha Chakravanhy a .....

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ght of Section 96(2) of the Act. The High Court in doing so has not examined or analyzed the provisions of Section 96(2) and has taken for granted that once it is established that the vehicle was being driven by an unlicensed person the Insurance Company stood exonerated. The decision is therefore of little significance for testing the validity or otherwise of the view taken in the judgment under appeal. The appellant has also relied on Shankar Rao v. M/s Babulal Fouzdar and another, A.I.R. 1980 .....

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g the vehicle falls in that category, the insurer is not liable under the policy and is, therefore, exempted from indemnifying the insured. In the present case, apart from the question whether Hari Prasad held a driving licence or not, he was neither in the employment of the insured nor was he driving the bus at the time of the accident on the order or with the permission of the insured. The insurer, therefore, is exempt from any liability under the terms of the policy and there is no infirmity .....

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n the following passage which does not threw any light in regard to the basis of the reasoning or the interpretation of Section 96(2)(b)(ii):- "The insurer who is opp. party no.2 in the common written statement denied the averments made in the petitions. It contended that it is not liable to compensate the appellant as the vehicle was driven by S. Appa Rao who had no driving licence. Further the accident took place near Jetty no. 1 which is not a public place. For the aforesaid reasons, it .....

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ence under section 96(2) could be rightly invoked by the 4th respondent. But this is a case where due to the negligence of the authorised driver, the third respondent, a third person, drove the vehicle and, therefore, I do not think the decision relied upon by the learned counsel is of any reliance to the facts of this case." This decision is also exposed to the same criticism. It is buttressed by ipse-dixit rather than rationation. The respondents have also placed reliance on Dwarka Prasad .....

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car is liable, then I do not see why if the insurance company cannot be fastened with the liability. The appellant had taken an insurance policy to cover the risk against third party. Clause (b) of Section 95(1) ensures the person against the liability incurred by him in respect of the death or bodily injury to any person caused by or arising out of the use of the vehicle in public place. In view of this cover the appellant no. 1 appears to me to be certainly entitled to shift the burden of the .....

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the owner of the vehicle is concerned, his vicarious liability for damages arising out of the accident cannot be disputed having regard to the general principles of law as also having regard to the violation of the obligation imposed by Section 84 of the Act which provides that no person driving or in charge of a motor vehicle shall cause or allow the vehicle to remain stationary in any public place, unless there is in the deiver s seat a person duly licensed to drive the vehicle or unless the .....

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respondents. The defence built on the exclusion clause cannot succeed for three reasons, viz:- 1. On a true interpretation of the relevant clause which interpretation is at peace with the conscience of Section 96, the condition excluding driving by a person not duly licensed is not absolute and the promisor is absolved once it is shown that he has done everything in his power to keep, honour, and fulfil the promise and he himself is not guilty of a deliberate breach. 2. Even if it is treated as .....

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rder to divine the intention of the legislature in the course of interpretation of the relevant provisions there can scarcely be a better test than that of probing into the motive and philosophy of the relevant provisions keeping in mind the goals to be achieved by enacting the same. Ordinarily it is not the concern of the legislature whether the owner of the vehicle insures his vehicle or not. If the vehicle is not insured any legal liability arising on account of third party risk will have to .....

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hicles on the roads. The law may provide for compensation to victims of the accidents who sustain injuries in the course of an automobile accident or compensation to the dependents of the victims in the case of a fatal accident. However, such protection would remain a protection on paper unless there is a guarantee that the compensation awarded by the Courts would be recoverable from the persons held liable for the consequences of the accident. A Court can only pass an award or a decree. It cann .....

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t, who themselves are obliged to incur not inconsiderable expenditure of time, money and energy in litigation. To overcome this ugly situation the legislature has made it obligatory that no motor vehicle shall be used unless a third party insurance is in force. To use the vehicle without the requisite third party insurance being in force is a penal offence.1 The legislature was also faced with another problem. The insurance policy might provide for liability walled in by conditions which may be .....

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slature has insisted and made it incumbent on the user of a motor vehicle to be armed with an insurance policy coveting third party risks which is in conformity with the provisions enacted by the legislature. It is so provided in order to ensure that the injured victims of automobile accidents or the dependents of the victims of fatal accidents are really compensated in terms of money and not in terms of promise. Such a benign provision enacted by the legislature having regard to the fact that i .....

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person or persons or by any person who is not fully licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification. The expression breach is of great significance. The dictionary meaning of breach is infringement or violation of a promise or obligation .1 It is therefore abundantly clear that the insurer will have to establish that the insured is guilty of an infringement or violation of a promise that a person who is duly l .....

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ured himself places the vehicle in charge of a person who does not hold a driving licence, that it can be said that he is guilty of the breach of the promise that the vehicle will be driven by a licensed driver. It must be established by the Insurance Company that the breach was on the part of the insured and that it was the insured who was guilty of violating the promise or infringement of the contract. Unless the insured is at fault and is guilty of a breach the insurer cannot escape from the .....

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is only in case of a breach or a violation of the promise on the part of the insured that the insurer can hide under the umbrella of the exclusion clause. In a way the question is as to whether the promise made by the insured is an absolute promise or whether he is exculpated on the basis of some legal doctrine. The discussion made in paragraph 239 of Breach of Contract by Carter (1984 Edition) under the head Proof of Breach, 1. See Collins English Dictionary. gives an inkling of this dimension .....

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other measures taken as to ensure that the vehicle cannot accidentally be put in motion in the absence of the driver." In view of this provision apart from the implied mandate to the licensed driver not to place an unlicensed person in charge of the vehicle. There is also a statutory obligation on the said person not to leave the vehicle unattended and not to place it in charge of an unlicensed driver. What is prohibited by law must be treated as a mandate to the employee and should be cons .....

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needs to be emphasised that it is not the contract of insurance which is being interpreted. It is the statutory provision defining the conditions of exemption which is being interpreted. These must therefore be interpreted in the spirit in which the same have been enacted accompanied by an anxiety to ensure that the protection is not nullified by the backward looking interpretation which serves to defeat the provision rather than to fulfil its life-aim. To do otherwise would amount to nullifyin .....

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se are five grounds for exculpation: construction of the contract; the doctrine of frustration; the existence of an implied term; the presence of an exclusion clause; and the application of a statutory rule or provision. These will be considered later." philosophy of the legislation without being informed of the true goals sought to be achieved. What the legislature has given, the Court cannot deprive of by way of an exercise in interpretation when the view which renders the provision poten .....

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is hardly any choice. The Court cannot but opt for the former view. Even if one were to make a strictly doctrinaire approach, the very same conclusion would emerge in obeisance to, the doctrine of reading down the exclusion clause in the light of the main purpose of the provision so that the exclusion clause does not cross swords with the main purpose highlighted earlier. The effort must be to harmonize the two instead of allowing the exclusion clause to snipe successfully at the main purpose. .....

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