1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD. FIRST APPEAL NO.4066 OF 2008. The New India Assurance Co.Ltd, through its Senior Divisional Manager, Shri Vishwas s/o Bansi Gayakwad, age 52 years, occu. Service at The New India Assurance Co., D.O. NO.1, Adalat Road, Aurangabad. .... APPELLANT. VERSUS 1 Syed Mussa Syed Yakub, age 40 years, occu. Driver, r/o Karmad, Tq. & Dist. Aurangabad 2 Syed Banobee Syed Mussa, age 34 yrs., occu. Household, r/o as above. 3 Uttamrao Jija Ukirde (Ukarde), age 52 yrs., occu. Agri., r/o Karmad, Tq. & Dist. Aurangabad. 4 Suhas V. Patil, age major occu. Business, r/o Sangam Housing Society, Chinchwad, Pune-411033. 5 Rameshwar Uttamrao Ukirde, minor & u/g of his father Uttamrao Jija Ukirde (Ukarde), age 52 yrs., occu. Agri., r/o Karmad, Tq. & Dist. Aurangabad. .... RESPONDENTS. ( R.Nos.1 & 2 ori. Claimants R.No.3 to 5 Ori. R.Nos.2 to 4). 2 ... Shri A.B. Kadethankar, Advocate for appellant. Shri N.K. Chaudhari, Advocate for R.Nos.1 & 2. Shri A.R. Kale, Advocate for R.Nos.3 & 5 ... CORAM:R.G. KETKAR,J. RESERVED ON: 21.11.2009. PRONOUNCED ON: 17.12.2009. JUDGMENT: 1. The appellant challenges the judgment and award dated July 14, 2008 passed by the learned Member, Motor Accident Claims Tribunal, Aurangabad (for short, MACT) below Exh.5 in MACP No.509 of 2007. By the impugned judgment and award, the tribunal allowed the application at Exh.5 made by respondents 1 and 2 – original claimants under Section 140 of the Motor Vehicles Act, 1988 (for short, “Act”) and held the appellant herein (original respondent No.1) and respondent Nos.3 to 5 (original respondents 2 to 4) liable to jointly and severally pay Rs. 50,000/- to the respondents 1 and 2 – claimants on account of no fault liability. It was further held that in case of failure to pay the amount within two months, the claimants would be entitled to interest @ 9% per annum till realization of the amount. The facts and 3 circumstances, leading to the filing of the present first appeal, may be briefly stated as follows: 2. The respondents 1 and 2 are the original claimants, respondent no.3 is the original respondent no.2 and is owner of Tata Indica Car bearing registration No.MH-X-5419, respondent no. 4 is the original respondent No.3, previous owner of the offending vehicle and the respondent no.5 is son of respondent No.3. The parties will be referred as per their status before the tribunal. 3. The claimants filed MACP No.509/2007 under Section 166 of the Act for grant of compensation of Rs.2,00,000/- on account of accidental death of their son Syed Siraj s/o Syed Mussa. The death of their son occurred out of use of the motor vehicle due to rash and negligent driving by the respondent no.4, son of the respondent no. 2. In the cause title of the petition itself, respondent no.4 was arrayed as minor and under guardianship of his father Uttamrao – respondent no.2. In the petition, it is contended that on 4 February 24, 2007 at about 18.00 hours, Syed Siraj was sitting on the step in front of their house situate in Kargil Mohalla, Karmad, District Aurangabad. At that time, the offending vehicle driven by its driver i.e. respondent no.4 was being driven in very high excessive speed and in rash and negligent manner. The said vehicle gave dash to their son due to which he sustained several injuries. He was shifted to Dhoot Hospital, Aurangabad and thereafter in Government Medical College & Hospital, Aurangabad for medical treatment. After examination of their son, the concerned doctor declared him dead. It was set out in the petition that their son was about 7 years old and was studying in 1st standard in New High School at Karmad. He was a brilliant student and in future he would have secured good job. Under various counts, the claimants claimed Rs.2,00,000/- from respondents 1 to 4 jointly and severally with interest @ 18% per annum from the date of filing of the petition i.e. July 16, 2007 till its realization. Pending the claim petition, the claimants 5 filed application at Exh.5 under Section 140 of the Act. The claimants relied upon the copy of the F.I.R., spot panchanama, inquest panchanama, post mortem notes, form AA. The respondents 2 to 4 though were served, did not file any reply. They were proceeded ex parte whereas respondent no.1 filed its reply. 4. Before the tribunal, on behalf of respondent no.1 Insurance Company, reliance was placed upon the judgment of the Apex Court in the case of Sardari & others v/s Sushilkumar & Others, 2008 AIR SCW 2075 for the purpose of contending that respondent no.4 is minor and was not holding any licence while driving the offending car. There was breach of condition of policy and consequently, the Insurance Company – respondent no.1 is not liable to pay amount of compensation. On the other hand, on behalf of claimants, reliance was placed upon following judgments: 1. Oriental Insurance Co. v/s Zaharulnisha & Oths., 2008 AIR SCW 3251; 2. United India Insurance Co. Ltd. v/s 6 Davinder Singh, 2008(2) Mh.L.J. 575; 3. United India Insurance Co. Ltd. Through its Divisional Manager and Authorised Representative and signatory, Ahmednagar Divisional Office V/s Kamal Maruti Darekar and others, 2007(4) T.A.C. 397 (Bom.). 4. Surendra Singh Lal Singh v/s Bombay Municipal Corporation, 2005(1) T.A.C. 656 (Bom.); 5. New India Assurance Co. Ltd. v/s Laxman Singh and Oths., 1991 ACJ 42; 6. New India Assurance Co. Ltd. v/s Mithakhan Dinakhan Notiyar and others, 1995(1) T.A.C. 14 (Guj.). 5. After hearing the parties, the tribunal came to the conclusion that all the necessary documents are filed along with the petition and at the stage of hearing the application under Section 140 of the Act, the tribunal is not expected to hold full fledged inquiry. Relying upon the judgment of the Apex Court in the case of United India Insurance Co. Ltd. v/s Davinder Singh (supra), the tribunal held that the claim is by third party and in the case of third party 7 risk, the insurer has to indemnify and recover the amount from the insured. Consistent with these findings, the tribunal held that the respondents are liable to jointly and severally pay Rs.50,000/- to the claimant on account of no fault liability and in case of their failure to pay the amount within two months from the date of the order, the claimants will be entitled to interest @ 9% per annum till realization of the amount. 6. The appeal came up for admission before this Court on November 18, 2008. The Court was pleased to issue notice before admission and the parties were put to the notice that the appeal is likely to be disposed of at the stage of admission. In the mean time, the Court granted ad interim relief in terms of prayer clause (B) of the application. 7. In support of this appeal, I heard Shri Kadethankar, learned Counsel for the appellant – Insurance Company, Shri N.K. Chaudhari, learned Counsel for respondents 1 and 2- original 8 claimants and Shri A.R. Kale, learned Counsel for respondents no.3 and 5. 8. Shri Kadethankar, learned Counsel for the appellant submitted that in view of the judgment of the Apex Court in the case of Yallwwa and Ors. v. National Insurance Co.Ltd. And Anr, 2007(4) ALL MR 822 (SC), appeal under Section 173 of the Act is maintainable against the order passed under Section 140 of the Act. He further submitted that the Insurance Company is entitled to raise all defences under Section 149 of the Act in a proceeding under Section 140 of the Act. The tribunal is bound to consider the defences so raised. 9. He further submitted that undisputedly, the respondent no.4 was minor at the time of the accident and was driving the offending car. In view of the provisions of sections 3, 4 and 5 of the Act, the question whether there was deliberate breach of policy conditions by the owner of the vehicle, is irrelevant. He invited my attention to the mandate of the Insurance 9 policy, which reads thus: “Persons or Class of persons entitled to drive:- Any person including insured provided that a person driving holds an effective driving license at the time of the accident and is not disqualified from holding or obtaining such a license. Provided also that the person holding an effective Learner’s License may also drive the vehicle and such a person satisfies the requirements of Rule 3 of Central Motor Vehicles Rules, 1989.” 10. In support of this submission, he relied upon the judgment of the Apex Court in the case of United India Insurance Co. vs. Rakesh Kumar Arora & others, 2008 AIR SCW 6872. 11. On the other hand, Shri Chaudhari, learned Counsel for the claimants submitted that though insurer is entitled to raise the defence as provided under Section 149(2)(a)(ii) of the Act, the tribunal is not expected to hold a full- 10 fledged trial but, has to conduct a summary inquiry while dealing with the application under Section 140 of the Act. In support of this submission, the learned Counsel for the claimants relied upon the judgment of this Court in the case of Bajaj Allianz General Insurance Co. Ltd. vs. Smt. Vaishali Shetty & Ors., 2009(2) ALL MR 902. He also submitted that though the inurer is entitled to raise defence as provided under Section 149(2)(a)(ii) of the Act, that by itself is not a proof of the fact of deliberate or willful breach of the policy concerned by the insured. He also submitted that it is necessary for the insurer to prove that the insured is guilty of deliberate and willful breach and it is only when the insured 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. Unless the insured is at fault and guilty of the breach, the insurer cannot escape from the obligation to indemnify the insured and successfully contend that he is exonerated having regard to the fact 11 that the insured committed a breach of his promise. In support of this submission, he relied upon the judgment of the Apex Court in the case of Skandia Insurance Co. Ltd. v/s Kokilaben Chandravadan and others, AIR 1987 SC 1184 and United India Insurance Co. Ltd. v/s Lehru and others, AIR 2003 SC 1292. 12. On facts, he submitted that the claimants did not come with the case before the tribunal that the offending vehicle was placed in the hands of the driver who was minor at the time of accident either deliberately or willfully. The claim petition merely sets out that the driver of the offending vehicle at the time of accident was a minor. Having regard to the nature of summary inquiry under section 140 of the Act, the insurer will have to establish that there was deliberate and/or willful breach by the insured. He distinguished the case of United India Insurance Company v/s Rakesh Kumar (supra), firstly on the ground that in that case, the impugned award was passed under Section 166 of the Act; secondly, he submitted that from the observations made by 12 the Apex Court, it reveals that the victim in that case was a passenger (occupant) in the offending vehicle and not a third party. He submitted that the judgment of the Apex Court in Rakesh Kumar’s case (supra), is not applicable in the present case since the claimants herein are the heirs and legal representatives of the deceased third party who was not a passenger (occupant) in the offending vehicle. 13. Shri Chaudhari, learned Counsel for respondents 1 and 2 further relied upon the judgment of the Apex Court in the case of National Insurance Company Ltd. V/s Swaran Singh and others, 2004 ACJ 1 and judgment of this Court in the case of United India Insurance Co. Ltd. v/s Kamal Maruti Darekar, 2007(4) T.A.C. 397 (Bom) to contend that the insurer was directed to pay the amount of compensation to the third party although it was found that the insurer had succeeded in proving his defence in terms of section 149 of the Act. 14. In so far as the present case is concerned, 13 it is not in dispute that at the time of accident, respondent No.4 driver of the offending vehicle was minor. It is also clear that we are concerned with the third party right under the policy in the present case. The Apex Court in the case of Rakesh Kumar Arora (supra), after considering sections 4 and 5 of the Act, held that the question whether there was a deliberate breach of policy conditions by owner of the vehicle is irrelevant. In view of this authoritative pronouncement of the Apex Court, the submissions advanced on behalf of the claimants that the insurer will have to prove deliberate and willful breach of conditions of policy by the owner of the offending vehicle cannot be accepted. The reliance placed by the claimants on the judgment of the Apex Court in the case of Skandia (supra) and Lehru (supra) does not advance their case any further. 15. The learned Single Judge of this Court in Bajaj Allianz’s case (supra), after exhaustively considering the provisions of the Act, as also Rules, held that the procedure to be followed 14 while deciding the claim petition under Section 140 of the Act is distinct from the procedure governing an application under Section 166 of the Act. Summary procedure has to be adopted for deciding a petition under section 140 of the Act. Paragraph 23 of the said judgment reads, as under: “23. Moreover, where a claimant has also filed a claim petition under section 166 of the said Act of 1988 which is pending for adjudication, the Tribunal can reserve the remedy of insurer to seek reimbursement from the insured in case the insurer is able to establish the defence while finally deciding a claim petition under section 166 of the said Act of 1988. Even section 141 of the said Act of 1988 can be followed while deciding the petition under section 166. The sum and substance of the aforesaid discussion is that though in a claim under section 140 of the said Act of 1988, an insurer is permitted to raise the defences covered by sub-section 2 of section 149 of the said Act of 1988, by reason of the insurer raising such defences the Tribunal cannot depart from the summary procedure and the Tribunal cannot allow a proceedings under section 140 of the said Act of 1988 to be converted into a full trial on par with a trial in a petition under section 166 of the 15 said Act of 1988. If Tribunals are allowed to adopt such a course, it will completely defeat the legislative intent of providing a quick remedy by way of section 140 of the said Act of 1988.” 16. Shri Chaudhari relied upon the judgment of the Apex Court National Insurance Co. Ltd v. Swaran Singh and others (supra). Interpretation of section 149(2)(a)(ii) vis-a-vis the proviso to section 149(2(a)(ii) of the Act was under consideration of the Apex Court. In paragraph 11 of the said judgment, the submissions made on behalf of the Insurance Company were recorded. For the purpose of deciding the controversy in the present appeal, submissions No.4 and 5 are relevant, which read thus: “(4) Once the defence by the insurer is established in the proceedings before the Tribunal, it is bound to discharge the insurer and fix the liability only on the owner and/or the driver of the vehicle. (5) Once it is held that the insurer has been able to establish its defence, the Tribunal or the court cannot direct the insurance companies to pay the awarded amount to the claimant and in turn recover the same from the owner and the driver of 16 the vehicle” 17. In paragraph 12 of the Judgment, the Apex Court recorded submissions made on behalf of third party claimants. Submissions 3, 4 are relevant for the purpose of deciding the controversy raised in the present petition, which read thus: (3) Once a certificate of insurance is issued in terms of the provisions of the Act, the insurer has a liability to satisfy an award. It has been pointed that a major departure has been made in the 1988 Act insofar as in terms of Section 96(2)(b) of the 1939 Act all the statutory defences were available in terms of sub-section (3) thereof provided that the policy conditions other than those prescribed therein had no effect; whereas in the new Act, Section 149(2)(a) prescribes that the policy is void if it is obtained by non-disclosure of material fact. Section 149(4) confines to only clause (b) and states that the conditions of policy except as mentioned in clause (b) of sub-section (2) are of no effect and, thus, after the amendment, except in cases which are covered under clause (b) of Section 149, the insurance companies are liable to pay to the third parties. In other words, the right of insurer to avoid the claim of the third party would arise only when the policy is obtained by misrepresentation of material fact and fraud and in no other case. (4) Sub-section (1) of Section 149 makes it clear that the insurer should pay first to the third parties and recover the same if they are absolved on any of the grounds 17 specified in sub-section (2) thereof. Reliance, in this connection, has been placed on British India Genl. Ins. Co. Ltd. V. Captain Itbar Singh, 1958-65 ACJ 1 (SC) and New India Assurance Co. Ltd. V. Kamla, 2001 ACJ 843 (SC).” 18 In paragraph 19 of the said judgment, the Apex Court observed that the cases before it mainly concerned with third party right under the policy. Paragraphs 65, 66 and 68 of the said judgment, read thus: “65 A beneficent statute, as is well known, must receive a liberal interpretation. [See Bangalore Water Supply & Sewerage Board etc. vs. A. Rajappa and Others etc. [(1978) 2 SCC 213], Steel Authority of India Ltd. and Others vs. National Union Waterfront Workers and Others [(2001) 7 SCC 1], ITI Ltd. vs. Siemens Public Communications Network Ltd. [(2002) 5 SCC 510], Amrit Bhikaji Kale and Others vs. Kashinath Janardhan Trade and Another [(1983) 3 SCC 437] and Kunal Singh vs. Union of India and Another [(2003) 4 SCC 524]. 66 The liability of the insurer is a statutory one. The liability of the insurer to satisfy the decree passed in favour of a third party is also statutory. 18 68 As has been held in Sohan Lal Passi, 1996 ACJ 1044 (SC), the insurance company cannot shake off its liability to pay the compensation only by saying that at the relevant point of time the vehicle was driven by a person having no licence.” 19 The Apex Court, in that case, considered the provisions of section 149 of the Act as also its judgment in the case of New India Assurance Co. Ltd. v. Kamla, 2001 ACJ 843 (SC) and observed in paragraph 75, as under: “75 Proviso appended to sub-section (4) of Section 149 is referable only to sub-section (2) of Section 149 of the Act. It is an independent provision and must be read in the context of Section 96(4) of the Motor Vehicles Act, 1939. Furthermore, it is one thing to say that the insurer will be entitled to avoid its liability owing to breach of terms of a contract of insurance but it is another thing to say that the vehicle is not insured at all. If the submission of the learned counsel for the petitioner is accepted, the same would render the proviso to sub-section (4) as well as sub-section (5) of Section 149 of 19 the Act otiose, nor any effective meaning can be attributed to the liability clause of the insurance company contained in sub- section (1). The decision in Kamla's case (supra) has to be read in the aforementioned context.” 20 In the case of United India Insurance Company v/s Kamal Maruti Darekar (supra), the learned Single Judge of this Court was dealing with the case of accident that took place on December 4, 1993 a motor-cyclist by name Maruti Keshav Darekar was knocked down due to dash of jeep No.MH-20-9485, which came from opposite direction. The claim was resisted by the opponent on the ground that the jeep was being driven without valid licence and the owner of the jeep committed fundamental breach of the terms and conditions of the insurance policy and therefore, no liability can be fastened on the insurer to pay the compensation. It was contended by the Insurance Company that respondent no.5 therein was driving the jeep without licence. The tribunal held that the jeep was being driven by the owner – respondent no.5 at the relevant time without driving licence. 20 The tribunal, consequently held that the Insurance Company was not legally liable to pay compensation. Even then, the tribunal held the insurer and owner jointly and severally liable to satisfy the award though the insurer can recover the amount paid to the claimants alongwith interest @ 9% p.a. from the owner of the vehicle i.e. respondent No.5-Vithal. Paragraphs 13, 14, 15 and 16 of the said Judgment read, as under: “13 The relevant provisions contained in Chapter XI of the Motor Vehicles Act, 1988, cannot be read in isolation. The third party risk is required to be insured as per Section 146. There is statutory requirement to insure a vehicle against third party risk. The conditions of policy are that of contract between the insurer and insured. The provisions of the Motor Vehicles Act have purpose to safeguard interest of third party. It is a beneficial legislation. The third parties cannot be left without protective umbrella only because the insured had agreed to abide 21 himself by certain conditions which he did not follow in letters and spirit. The third parties have certain rights as enumerated in Section 150 of the Motor Vehicles Act. Therefore, harmonious construction of all these provisions is required to be made. 14 In "National Insurance Co. Ltd. V/s. Swaran Singh and others" 2004 AIR SCW 663, the Apex Court considered he relevant provisions of Sub-Section (2) and (3) of Section 149 of the Motor Vehicles Act, 1988 along with other provisions. The Apex Court took survey of catena of judicial decisions. The Apex Court held that where the driver of the vehicle admittedly did not hold any licence and the same was allowed consciously to be driven by the owner of the by such person, the insurer is entitled to vehicle succeed in its defence and avoid liability. The matter, however, may be different where a disputed question of fact arises as to whether the driver had a valid licence or where the owner of the vehicle committed a breach of the terms of the contract of insurance as also the provisions of the Act by consciously allowing any person to 22 drive a vehicle who did not have a valid driving licence. In a given case, the driver of the vehicle may not have any hand at all, e.g. a case where an accident takes place owing to mechanical fault or vis-major. The Apex Court held: "The right to avoid liability in terms of sub-section (2) of Section 149 is restricted as has been discussed herein before. It is one thing to say that the insurance companies are entitled to raise a defence but it is another thing to say that despite the fact that its defence has been accepted having regard to the facts and circumstances of the case, the Tribunal has power to direct them to satisfy the decree at the first instance and