IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:09.07.2008 C O R A M THE HONOURABLE MR.JUSTICE P.R.SHIVAKUMAR C.M.A.No.1512 of 2002 and Cross Objection No.59 of 2003 Sankar ... Appellant in CMA V.Muthuswamy Gounder ... Cross Objector Vs. 1.M.Ramasamy 2.V.Muthuswamy Gounder 3.United India Insurance Company Limited, 4-A, Peremanu Main Road, Salem Town. ... Respondents in CMA 1.Sankar 2.M.Ramasamy 3.United India Insurance Company Limited, 4-A, Peremanu Main Road, Salem Town. ... Respondents in cross objection Prayer: Appeal filed under Section 173 (1) of Motor Vehicles Act, against the Judgment and Award dated 11.12.2001 in M.C.O.P.No.820 of 2000 on the file of Motor Accidents Claims Tribunal (Principal Subordinate Judge), Erode. For Appellant in CMA.1512/02 : Mr.A.K.Kumaraswamy R1 in Cross Objection For 2nd Respondent in C.M.A.1512/02 Cross Objector in Cross Objection : Mr.T.K.Seshadri For 3rd Respondent : Mr.C.R.Krishnamoorthy in both the CMA and Cross Objection. JUDGMENT The injured claimant is the appellant herein. The claim made by the appellant before the Motor Accidents Claims Tribunal (Principal Subordinate Judge), Erode in M.C.O.P.No.820 of 2000 claiming a sum of Rs.10,00,000/- as compensation from the respondents herein in their capacities as driver, owner and insurer of the offending vehicle https://hcservices.ecourts.gov.in/hcservices/ viz., a Tipper lorry bearing Registration No.TN 27 F 3335 was allowed by the Tribunal in part and the respondents 1 and 2 alone were directed to pay compensation to the appellant/ petitioner by a Judgment and Award dated 11.12.2001. The third respondent, insurer of the said vehicle was totally exonerated on the ground that there was violation of a condition of the insurance policy in so far as the said vehicle was plied at the time of accident without a valid permit. The Tribunal quantified the compensation at Rs.2,65,000/- and directed the respondents 1 and 2 herein to pay the said amount jointly and severally together with an interest at the rate of 9% per annum from the date of petition till realisation and also with proportionate costs. 2.As against the disallowed portion of the claim and the total exoneration of the third respondent/insurer, the appellant/petitioner has brought forth this civil miscellaneous appeal on various grounds set out in the grounds of appeal. 3.The accident alleged by the appellant/petitioner that took place on 04.04.1999 at about 1.30 p.m. near Seetharaman Palayam Sudukadu has not been denied by any of the respondents. It is also not in dispute that a motorcycle bearing Registration No.TTD 7997 and the Tipper lorry bearing Registration No.TN 27 F 3335 belonging to the second respondent were the vehicles involved in the said accident and that the petitioner was the rider of the said above motorcycle. The contention of the appellant/petitioner that while he was proceeded in the said motorcycle the above said Tipper lorry which came in the opposite direction hit him and that the accident occurred solely due to the rashness and negligence on the part of the first respondent namely, the driver of the Tipper lorry was accepted by the Tribunal. The Tribunal on an appreciation of evidence held that the said accident was the result of the rash and negligent driving of the Tipper lorry belonging to the second respondent herein by its driver, the first respondent herein. The appellant/petitioner has not chosen to challenge the said finding in the present appeal. The challenge made in the present appeal is confined to the quantum of compensation and the exoneration of the third respondent. 4.The second respondent, owner of the above said offending vehicle, who chose to remain exparte before the Tribunal has preferred a cross objection in Cross Objection No.59 of 2003. Contending that the third respondent played a fraud upon the cross objector by preventing him from coming to the Tribunal to contest the MCOP; that the third respondent who obtained the signature of the second respondent (cross objector) in the vakalat form in the guise of engaging a counsel for him also to contest the MCOP simply allowed an exparte order to be passed against the second respondent/cross objector and that had he not been prevented by the third respondent from contesting the MCOP, he would have placed materials before the https://hcservices.ecourts.gov.in/hcservices/ Tribunal to show that there was no violation of policy conditions and that the insurer's liability to indemnify the second respondent/cross objector was absolute. Apart from the said contentions regarding the liability of the insurer to indemnify the insured namely, the second respondent/cross objector, no other ground has been raised in the memorandum of cross objection filed by the second respondent/cross objector. 5.Though the appellant/petitioner has chosen to challenge the award on the question of quantum as well as the question of liability of the insurer to pay compensation to the appellant/injured (third party), the learned counsel for the petitioner would fairly concede that the appellant/ petitioner could not substantiate his challenge made against the award regarding quantum. This Court also, on an independent evaluation and re-appreciation of evidence, comes to the conclusion that there is no scope for interference with the award of the Tribunal regarding quantum. Therefore, the only point that remains to be decided in this case is: "Whether there has been a violation of policy condition? Whether the violation of a policy condition will result in the exoneration of the insurer altogther from its liability to pay compensation to the third party victim?" 6.Admittedly, the offending vehicle namely, the Tipper lorry bearing Registration No.TN 27 F 3335 owned by the second respondent herein was covered by an insurance policy issued by the third respondent. A copy of the Policy has been produced by the third respondent and marked on the side of the respondents as Ex.B.3. From Ex.B.3 it is obvious that the policy for the said vehicle was issued in Certificate No.170803/31/021/16/24295/1998 to be effective from 25.07.1998 to 24.07.1999. The accident took place on 04.04.1999 therefore, there cannot be any dispute regarding the fact that the accident took place well within the period of coverage of the insurance policy. However, the third respondent/insurer took a defence before the Tribunal that the insurer could not be asked to pay compensation as per the indemnity clause contained in the contract of insurance since there was a violation of policy condition. The violation cited by the third respondent is that the vehicle was plied without a valid permit. 7.A copy of the permit issued to the said vehicle and a copy of order passed pursuant to the surrender of the said permit have been produced and marked by the third respondent as Exs.B1 and B2 respectively. Both the copies were certified to be true copies by the Regional Transport Officer, Salem. It is patent from Ex.B1 that a permit had been issued for the said Tipper lorry for a period of five years from 25.08.1995 to 24.08.2000. However, the said permit was surrendered on 30.03.1999 itself and an order accepting the said surrender was passed on 31.03.1999 as revealed by Ex.B2. It is not the case of any one of the parties to the appeal, including the https://hcservices.ecourts.gov.in/hcservices/ second respondent/cross objector, that subsequent to the said surrender a new permit was obtained and the same was in force as on the date of accident. Thus there is no defect or infirmity in the finding recorded by the Tribunal that the vehicle was plied on road on the date of accident without covered by a valid permit. There cannot be any second opinion that plying the goods vehicle without covered by a valid permit is in violation of a vital condition of the contract of insurance. Therefore, the finding of the Tribunal that the second respondent/owner of the offending vehicle had committed an act of violation of a policy condition also cannot be interfered with in this appeal or cross objection. The main contention of the parties revolves around the consequences of such a violation of a policy condition. Whether violation of such a policy condition will result in total exoneration of the Insurance Company of its liability towards the third party victims also is the bone of contention in this appeal and the cross objection. 8.The learned counsel for the appellant, drawing the attention of this Court to the latest Judgment of the Hon'ble Supreme Court in Premkumari and others V. Prahlad Dev and others reported in CDJ 2008 SC 076, contended that in case of absence of coverage alone the insurer shall be exonerated of its liability towards third party in entirety and that in case of violation of policy condition giving rise to a right to the insurer to rescind the contract of insurance, the liability of insurer towards the third party should be held absolute with a rider that the insurer shall be at liberty to recover the amount from the insured after satisfying the claim made by the third party victims. 9.On the other hand, the learned counsel for the second respondent/cross objector, relying on the Judgment of the learned Single Judge of Andra Pradesh High Court in United India Insurance Company Limited V. Shekamma and others reported in 1995 ACJ 86, would contend that in case of expiry of permit before the date of accident, the insurer's liability cannot be negatived on the sole ground that the insured did not possess a valid permit when the accident occurred. Of course, in paragraph 7 of the said Judgment, the learned Judge of the Andra Pradesh High Court expressed a view that it was enough to show that there was a valid permit as on the date of issue of the policy of insurance and the absence of such a permit as on the date of accident would not absolve the insurer from its liability to indemnify the insured. With great respect, this Court is not in a position to accept the same to be reflecting the correct proposition of law in this regard. 10.In the Judgment relied on by the learned counsel for the appellant cited supra, the Hon'ble Supreme Court has clearly held that the violation of any one of the policy conditions will definitely affect the obligation of the insurer to indemnify the https://hcservices.ecourts.gov.in/hcservices/ insured. Referring to the Judgments of the Supreme Court in Oriental Insurance Company Limited V. Meena Variyal and Others reported in (2007) 5 SCC 428 and Swaran Singh's case reported in (2004) 3 SCC 297 and Laxmi Narain Dhut's case reported in (2007) 3 SCC 700, the Hon'ble Apex Court in Premkumari and others V. Prahlad Dev and Others (cited supra) quoted the following observations made in Laxmi Narain Dhut's case with approval and held that in cases of violation of policy conditions the insurer's liability towards the third party shall not be affected and that in such cases, the insurer had to pay the compensation decided by the Tribunal to the claimants and then recover the same from the insured. The relevant portion of the said Judgment is extracted hereunder:- "In view of the above analysis the following situations emerge: 1.The decision in Swaran Singh case has no application to cases other than third party risks. 2.Where originally the licence was a fake one, renewal cannot cure the inherent fatality. 3.In case of third party risks the insurer has to indemnify the amount, and if so advised, to recover the same from the insured. 4.The concept of purposive interpretation has no application to cases relatable to Section 149 of the Act". 11.Following the said Judgment of the Hon'ble Supreme Court, this Court also holds that in view of the above proof of the fact that there had been violation of a policy condition as the vehicle had been plied without a valid permit, the liability of the third respondent is to be restricted to making payment to the claimant with a right to recover the same from the insured namely, the second respondent/cross objector by levying execution in the very same MCOP without having the need to file a separate suit or original petition. To the extent indicated above, the Civil Miscellaneous Appeal shall stand allowed. Cross Objection is dismissed. There shall be no order as to costs. Sd/- Deputy Registrar. /true copy/ Sub Asst. Registrar. Sgl https://hcservices.ecourts.gov.in/hcservices/ To The Principal Subordinate Judge, Motor Accidents Claims Tribunal, Erode. 1 cc to Mr.A.K. Kumarasamy, Advocate, SR. 36112 1 cc to Mr.C.aR. Krishnamurthy, Advocate, SR. 35446 C.M.A.No.1512 of 2002 KSJ (CO) kk 29/7 https://hcservices.ecourts.gov.in/hcservices/