In the High Court of Punjab and Haryana at Chandigarh F.A.O. No. 3336 of 2005 Date of decision: December 01, 2009 Moorti and others .. Appellants Vs. Bakshish Singh and others .. Respondents Coram: Hon'ble Mr. Justice A.N. Jindal Present: Mr. R.S. Malik, Advocate for the appellants. Mr. Banni Thomas, Advocate for the respondent No.3. None for the respondents No.1 and 2. A.N. Jindal, J This appeal for enhancement filed by the claimants is against the award dated 2.5.2005 passed by the Motor Accident Claims Tribunal, Sonepat, awarding compensation to the tune of Rs.6,77,000/- in favour of the claimants and against the respondents No.1 and 2 on account of the death of Bhoop Singh, involves the sole question, “whether the Insurance Company could be exonerated from the liability for the violation of any terms and condition of the policy by the owners-respondents No.1 and 2?” The company was exonerated for the reason that the driver of the offending vehicle i.e. respondent No.1 was not holding a valid driving licence. During the course of appeal, the learned counsel for the claimants advanced two fold arguments. One is that he is not bound by any contract between the insurer or the insured. Second is that once the insurance of the vehicle is proved, then the claimants being third parties become entitled to recover the amount and the insurance company could recover the same from the insurer for the violation of the terms of the policy of insurance. Arguments have been refuted by the learned counsel for the respondents. Heard. The question as to under what circumstances company could be exonerated come up for consideration before the Apex Court, comprising of three Judges Bench in case National Insurance Co. Ltd. vs. Swaran Singh and others, 2004 (2) RCR (Civil) 114, wherein, it was F.A.O. No. 3336 of 2005 -2- *** observed as under :- “xxx xxx xxx xxx xxx xxx (vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches on the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply “the rule of main purpose” and the concept of “fundamental breach” to allow defence available to the insured under Section 149 (2) of the Act. xxx xxx xxx xxx xxx xxx (x) Where on adjudication of the claim under the Act the Tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of section 149 (2) read with sub-section (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the tribunal. Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by sub- section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days F.A.O. No. 3336 of 2005 -3- *** from the date of announcement of the award by the tribunal.” In this case also, it has been established on the record that there was breach of policy as proved by the Insurance Company on account of the fact that the driver was not holding a valid driving licence, as such, the claimants being the third party cannot be deprived of their right of compensation from the insurance company. However, the insurance company would be at liberty to recover the amount from the respondents No.1 and 2. Similar observations were made in case United India Insurance Company Limited vs. Dhana Bhatra and others, 2009 ACJ 1693, wherein it was observed as under :- “It may be relevant to mention here that the Hon'ble Supreme Court in the case of New India Assurance Co. Ltd. vs. Kamla, 2001 ACJ 843 9SC) and also in the case of National Insurance Co. Ltd. vs. Challa Brarathamma, 2004 ACJ 2094 (SC), held that not possessing a valid driving licence being breach of policy condition the poor claimants should not suffer. The Supreme Court has further held that the insurance company may be directed to pay the amount and should be permitted to recover the same from the owner of the vehicle. In consonance with the ratio of the aforesaid decision and section 149 of the Motor Vehicles Act, it is directed that the insurance company should pay the amount to the claimant-respondent No.1 and realize the same from the owner in due process of law as was observed by the Hon'ble Apex Court.” Thus, while relying upon the aforesaid two judgments, I accept the appeal, modify the findings returned by the Tribunal to the extent that the respondents No.1 to 3 who would be liable to pay compensation. However, if the Insurance Company being respondent No.3 makes payment of the amount, then it would be at liberty to recover the same from the respondents No.1 and 2 by way of enforcing the award against them. December 01, 2009 (A.N. Jindal) F.A.O. No. 3336 of 2005 -4- *** deepak Judge