IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 27TH JULY 2009 / 5TH SRAVANA 1931 MACA.No. 1454 of 2006() ----------------------- OPMV.490/1996 of M.A.C.T.,PERUMBAVOOR .................... APPELLANT/PETITIONER: ----------------------------------- SASIDHARAN NAIR, S/O.PARAMESWARAN NAIR MUNDACKAL HOUSE, IRINGOLE KARA, PERUMBAVOOR VILLAGE. BY ADV. SRI.V.RAJENDRAN (PERUMBAVOOR) SRI.GEORGE VARGHESE KIZHAKKAMBALAM RESPONDENT(S)/RESPONDENTS: -------------------------------------- 1. ALI @ ALIYAR, S/O. MAKKAR, EKKARAKUDIYIL HOUSE, VENDUVAZHY KARA, KOTHAMANGALAM VILLAGE. 2. K.S. SASIDHARAN NAIR, LAL MAHAL RAMAPURAM, KOTTAYAM DISTRICT. 3. THE ORIENTAL INSURANCE CO.LTD., MATTEETHARA BUILDINGS, BAKER JUNCTION, M.C. ROAD, KOTTAYAM-1. ADV. SRI.P.JAYASANKAR FOR R3 THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 2/07/2009, THE COURT ON 27/07/2009 PASSED THE FOLLOWING: CR C.N.RAMACHANDRAN NAIR & C.K.ABDUL REHIM, JJ. ------------------------------------------ M.A.C.A.NO.1454 of 2006 ------------------------------------------ Dated this the 27th day of July, 2009. J U D G M E N T Abdul Rehim,J. 1. Claimant in OP(MV) No:490/96 on the files of the Motor Accidents Claim Tribunal, Perumbavoor is the appellant herein. The accident occurred on 1.1.1996 when a motor cycle bearing Regn.No:KL-5/C-8633 driven by the 1st respondent hit against the motor cycle in which the appellant/claimant was riding. The 2nd respondent is the owner and 3rd respondent is the insurer of the motor cycle bearing Regn.No:KL-5/C-8633. The 1st respondent remained exparte before the Tribunal. The 2nd respondent contended that the motor cycle in question belongs to him, but it was missing from Palai since 20.12.1995 as stolen by somebody. It is stated that only on getting information that the vehicle was involved in an accident at Perumbavoor and the police authorities had taken it into custody, he came to know about the motor cycle lost from his custody. It is further submitted that with respect to theft of the vehicle a criminal case had already been registered at Palai Police station as Crime No:512/1996. The 2nd respondent admitted that the vehicle stands insured with the 3rd respondent. But he contended that MACA.1454/06 2 the 1st respondent was not authorised to drive the vehicle, and in fact he flew from the scene of occurrence on causing the accident. 2. The 3rd respondent Insurance Company denied their liability on the ground that since the person who was riding the motor cycle was not authorised by the 2nd respondent, there is no vicarious liability on the part of the 2nd respondent, which the 3rd respondent is liable to be indemnified. The 3rd respondent also disputed the claim for compensation made under different heads as excessive and exorbitant. 3. On the basis of the documentary evidence relating to the criminal case registered in connection with the accident, the Tribunal found that the 1st respondent is negligent in causing the accident. But holding that the offending vehicle was not under the custody or control of the 2nd respondent registered owner and the 1st respondent was not a servant or authorised person of the 2nd respondent, the Tribunal found the 2nd respondent as not liable to pay the compensation. The 3rd respondent being the insurer is therefore held as not liable since they are not bound to indemnify the 2nd respondent. The learned Tribunal relied on the judgment reported in New India Assurance Co.Ltd. Vs. Selvarajamani and others (1998 ACJ 547) in support of the MACA.1454/06 3 above findings. The Tribunal found that the claimant is entitled for a total compensation of Rs.33,069/-. But the 1st respondent alone was held liable to make payment of the said amount. In this appeal the challenge is against exoneration of the 3rd respondent from the liability. The appellant is also seeking enhancement of the compensation awarded by the Tribunal. 4. While considering the question regarding the liability of the insurer to compensate death or bodily injury of third party involved in a motor accident, the first question to be noticed is as to whether the insurer is liable to indemnify the insured. In this case the contention of the 3rd respondent that since the use of the vehicle was without knowledge or consent of the owner/insured and hence the insured has no vicarious liability with respect to the negligent act of the unauthorised person. But the fact remains that the vehicle in question is covered by a policy issued by the 3rd respondent, at the time of accident. Therefore it is necessary to look into the statutory obligation of the insured as provided under Section 147(5) of the Motor Vehicles Act. There is a statutory obligation cast upon the insurer to indemnify the persons or class of persons specified in the policy in respect of any liability which the policy purports to cover. As per the statutory liability the policy covers injuries MACA.1454/06 4 sustained to 3rd parties. Under Section 149 of the Act the insurer of the vehicle is liable to the award of compensation to the person who is entitled to the statutory benefit of compensation. The only exemption under which can be claimed by the insurer is on any of the condition as provided under Section 149(2). The question arose for consideration is whether the insured can claim such exoneration based on the provisions contained in Section 149(2)(a)(ii) ? 5. A Single Bench of this Court in Oriental Insurance Co.Ltd. Vs. Abdul Rasheed ((2006) 1 KLT 589) had occasion to consider the question regarding liability of the insured in the case of a stolen vehicle causing accident. In the said decision it is observed as follows:- "The provisions of the Act, as amended in 1994, as contained in S.149(1), cast a statutory responsibility on the insurer to honour the awards passed by the Tribunals and courts awarding compensation to the victims under 147(5) of the Act. The insurer shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability, which the policy covers, in the case of that person or those classes of persons, which include third party. In the case at hand, it is in evidence that O.Rajan did not authorise S.K. Sunil to drive his vehicle. S.K.Sunil was in control of the vehicle, he drove it and caused the accident. Therefore, accepting the principle contained in Rajasthan State Road Transport Corporation Vs. Kailasnath Kothari and ors. (1997 ACJ 1148), the vehicle was fully under the control of S.K. Sunil. Hence he is also liable. But, as the insurance of the vehicle was valid, and in view of sections 147(5) and 149(1) of the Act, the appellant, the insurance MACA.1454/06 5 company, shall satisfy the award and then realise the said award amount from S.K. Sunil, who caused the accident." But the decision of the Hon'ble Supreme Court relied thereon, Rajasthan State Road Transport Corporation Vs. Kailash Nath Kothari and ors. (1997 ACJ 1148) relates to a case where a bus has been entrusted by its owner on hire to be plied by the State Road Transport Corporation, and the accident took place when the bus was driven in violation of the conditions of the agreement of hire. The legal situation is totally different in a case where the vehicle was stolen from the owner and the accident occurred when the thief was driving the vehicle. 5. Learned counsel for the 3rd respondent had pointed out decision of a Single Bench of High Court of Madras reported in New India Assurance Co. Vs. Selva Rajamani and others (1998 ACJ 547). It is held therein that in the case of the accident caused by a stolen vehicle and the accident caused due to negligence of the person who had stolen the vehicle, the Insurance Company cannot be made liable in the absence of any liability of the owner. But in the said case that court has not referred to the liability of the Insurance company based on the provisions contained in Section 147(5) and 149(2)(a)(ii). 6. The learned counsel for the appellant had placed reliance on the decision of the Hon'ble Supreme Court in MACA.1454/06 6 National Insurance Co. Ltd. Vs. Nitin Khandelwal ((2008) 11 SCC 259). Considering the provisions contained under Section 149(2)(a)(ii) the hon'ble Supreme Court observed that in case of theft of vehicle nature of the use of the vehicle cannot be looked into and the Insurance Company cannot repudiate the claim on that basis. But on the facts of the case, it is a claim made by the insured himself with respect to the damages sustained to him due to theft of the vehicle. 7. The hon'ble Supreme Court in Skandia Insurance Co. Ltd. Vs. Kokilaben Chandravadan and others ((1987) 2 SCC 654) observed as follows:- " The very concept of infringement or violation of the promise that the expression 'breach' carries within itself induces an inference that the violation or infringement on the part of the promisor must be a wilful infringement or violation. If the insured is not at all at fault and has not done anything he should not have done or is not amiss in any respect how can it be conscientiously posited that he has committed a breach? It is only when the insured himself placed 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 the 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 obligation to indemnify the insured and successfully contend that he is exonerated having regard to the fact that the promisor (the insured) committed a breach of his promise. Not when some mishap occurs by some mischance. When the insured has done everything within his power inasmuch as he has engaged a licensed MACA.1454/06 7 driver and has placed the vehicle in charge of a licensed driver, with the express or implied mandate to drive himself it cannot be said that the insured is guilty of any breach. And it 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." Relying on the above said decision the Hon'ble Supreme Court in United India Insurance Co.Ltd. Vs. Lehru (2003 (2) KLT 97 (SC)) observed as follows:- " Now let us consider S.149(2). Reliance has been placed on S.149(2)(a)(ii). As seen in order to avoid liability under this provision it must be shown that there is a "breach". As held in Skandia's and Sohan Lal Passi's cases (supra) the breach must be on part of the insured. We are in full agreement with that. To hold otherwise would lead to absurd result. Just to take an example, suppose a vehicle is stolen. Whilst it is being driven by the thief there is an accident. The thief is caught and it is ascertained that he had no licence. Can the insurance company disown liability? The answer has to be an emphatic "No". To hold otherwise would be to negate the very purpose of compulsory insurance. The insured or relatives of person killed in the accident may find that the decree obtained by them is only a paper decree as the owner is a man of straw. The owner himself would be an innocent sufferer. It is for this reason that the legislature, in its wisdom, has made insurance, at least third party insurance, compulsory. (emphasis supplied). The aim and purpose being that an insurance company would be available to pay. The business of the company is to insure. In all businesses there is an element of risk. All persons carrying on business must take risks associated with the business. Thus it is equitable that the business which is run for making profits also bears the risk associated with it. At the same time innocent parties must not be made to suffer or loss. These provisions meet these requirements. We are thus in agreement with what is laid down in aforementioned cases viz that in order to avoid liability it is not sufficient to show that the person driving at the time of accident was not duly MACA.1454/06 8 licensed. The insurance company must establish that the breach was on the part of the insured." 8. Relying on the dictum laid in the decisions of the hon'ble Supreme Court cited above, and considering the provisions contained in Section 149(2) it is clear that in order to avoid liability for payment of the amounts due to a third party who sustained injury in a vehicle which is properly insured, in view of 149(2)(a)(ii) the insurer should prove that there is a"breach" on the part of the insured. The theft of the vehicle and the unauthorised use by the person who had stolen the vehicle cannot be termed as a breach committed by the insured. Therefore the insurer cannot be exonerated from the liability to satisfy the award in favour of a third person. 9. Of course the insurer will be always at a liberty to recover such payments from the person who is liable. In the case at hand the insured cannot be held liable for payment since there is no vicarious liability for the negligence on the part of the person who caused the accident. But with respect to liability of the rider of the motor vehicle, the insurer is not liable to indemnify such liability. Further there is no evidence forthcoming in the case to disprove the contention of the insurer that the 1st respondent was not holding any valid licence at the time of the accident. Hence at any rate the 1st respondent is MACA.1454/06 9 liable for payment of the amount of compensation. But considering the provisions in Sections 147(5) and 149(2)(a)(ii) we are inclined to hold that the 3rd respondent Insurance Company is liable for payment of the award amount, subject to their right of recovery as provided under the proviso to sub- section (4) of Section 149 against the 1st respondent. 9. With respect to the quantum of compensation the learned counsel appearing for the appellant vehemently contended that the Tribunal has not accepted Ext.A8 certificate issued from a private Dental Clinic wherein it is certified that the claimant had sustained mobility of 14 teeth and they were extracted. But the Tribunal on an evaluation of the medical records issued from the hospital wherein the claimant was treated at the first instance, such as A5 Accident Register-cum- Wound Certificate, A6 Discharge Summary, and A7 Treatment Certificate, observed that the claimant suffered injury only to one tooth, the upper central incisor. We do not find any reason to negative such a finding. On consideration of the amounts awarded under various heads we are of the considered opinion that the compensation awarded is just and reasonable. Therefore we do not propose to interfere with the award for enhancing the compensation. MACA.1454/06 10 In the result, the appeal is partly allowed. The findings of the Tribunal with respect to liability of the 3rd respondent for payment of compensation is hereby modified holding that the 3rd respondent Insurance Company is liable to make payment of the amount awarded by the Tribunal to the claimant in terms of the award. But it is made clear that on such payment the 3rd respondent Insurance Company is at liberty to recover the amount from the 1st respondent. C.N.RAMACHANDRAN NAIR,JUDGE C.K.ABDUL REHIM, JUDGE okb