Sankar v. M.Ramasamy & Ors

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED:09.07.2008C O R A MTHE HONOURABLE MR.JUSTICE P.R.SHIVAKUMAR C.M.A.No.1512 of 2002 andCross Objection No.59 of 2003Sankar... Appellant in CMAV.Muthuswamy Gounder... Cross ObjectorVs.1.M.Ramasamy2.V.Muthuswamy Gounder3.United India Insurance Company Limited, 4-A, Peremanu Main Road, Salem Town.... Respondents in CMA1.Sankar2.M.Ramasamy3.United India Insurance Company Limited, 4-A, Peremanu Main Road, Salem Town.... Respondents in cross objectionPrayer: 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 of2000 on the file of Motor Accidents Claims Tribunal (PrincipalSubordinate Judge), Erode.For Appellantin CMA.1512/02: Mr.A.K.Kumaraswamy R1 in Cross ObjectionFor 2nd Respondent in C.M.A.1512/02Cross Objector in Cross Objection: Mr.T.K.Seshadri For 3rd Respondent: Mr.C.R.Krishnamoorthyin both the CMA and Cross Objection.JUDGMENTThe injured claimant is the appellant herein. The claim made bythe appellant before the Motor Accidents Claims Tribunal (PrincipalSubordinate Judge), Erode in M.C.O.P.No.820 of 2000 claiming a sum ofRs.10,00,000/- as compensation from the respondents herein in theircapacities 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 allowedby the Tribunal in part and the respondents 1 and 2 alone weredirected to pay compensation to the appellant/ petitioner by aJudgment and Award dated 11.12.2001. The third respondent, insurer ofthe said vehicle was totally exonerated on the ground that there wasviolation of a condition of the insurance policy in so far as thesaid vehicle was plied at the time of accident without a validpermit. The Tribunal quantified the compensation at Rs.2,65,000/- anddirected the respondents 1 and 2 herein to pay the said amountjointly and severally together with an interest at the rate of 9% perannum from the date of petition till realisation and also withproportionate costs.2.As against the disallowed portion of the claim and the totalexoneration of the third respondent/insurer, the appellant/petitionerhas brought forth this civil miscellaneous appeal on various groundsset out in the grounds of appeal. 3.The accident alleged by the appellant/petitioner that tookplace on 04.04.1999 at about 1.30 p.m. near Seetharaman PalayamSudukadu has not been denied by any of the respondents. It is alsonot in dispute that a motorcycle bearing Registration No.TTD 7997 andthe Tipper lorry bearing Registration No.TN 27 F 3335 belonging tothe second respondent were the vehicles involved in the said accidentand that the petitioner was the rider of the said above motorcycle.The contention of the appellant/petitioner that while he wasproceeded in the said motorcycle the above said Tipper lorry whichcame in the opposite direction hit him and that the accident occurredsolely due to the rashness and negligence on the part of the firstrespondent namely, the driver of the Tipper lorry was accepted by theTribunal. The Tribunal on an appreciation of evidence held that thesaid accident was the result of the rash and negligent driving of theTipper lorry belonging to the second respondent herein by its driver,the first respondent herein. The appellant/petitioner has not chosento challenge the said finding in the present appeal. The challengemade in the present appeal is confined to the quantum of compensationand the exoneration of the third respondent. 4.The second respondent, owner of the above said offendingvehicle, who chose to remain exparte before the Tribunal haspreferred a cross objection in Cross Objection No.59 of 2003.Contending that the third respondent played a fraud upon the crossobjector by preventing him from coming to the Tribunal to contest theMCOP; that the third respondent who obtained the signature of thesecond respondent (cross objector) in the vakalat form in the guiseof engaging a counsel for him also to contest the MCOP simply allowedan exparte order to be passed against the second respondent/crossobjector and that had he not been prevented by the third respondentfrom 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 andthat the insurer's liability to indemnify the second respondent/crossobjector was absolute. Apart from the said contentions regarding theliability of the insurer to indemnify the insured namely, the secondrespondent/cross objector, no other ground has been raised in thememorandum of cross objection filed by the second respondent/crossobjector.5.Though the appellant/petitioner has chosen to challenge theaward on the question of quantum as well as the question of liabilityof the insurer to pay compensation to the appellant/injured (thirdparty), the learned counsel for the petitioner would fairly concedethat the appellant/ petitioner could not substantiate his challengemade against the award regarding quantum. This Court also, on anindependent evaluation and re-appreciation of evidence, comes to theconclusion that there is no scope for interference with the award ofthe Tribunal regarding quantum. Therefore, the only point thatremains to be decided in this case is: "Whether there has been aviolation of policy condition? Whether the violation of a policycondition will result in the exoneration of the insurer altogtherfrom its liability to pay compensation to the third party victim?"6.Admittedly, the offending vehicle namely, the Tipper lorrybearing Registration No.TN 27 F 3335 owned by the second respondentherein was covered by an insurance policy issued by the thirdrespondent. A copy of the Policy has been produced by the thirdrespondent and marked on the side of the respondents as Ex.B.3. FromEx.B.3 it is obvious that the policy for the said vehicle was issuedin Certificate No.170803/31/021/16/24295/1998 to be effective from25.07.1998 to 24.07.1999. The accident took place on 04.04.1999therefore, there cannot be any dispute regarding the fact that theaccident took place well within the period of coverage of theinsurance policy. However, the third respondent/insurer took adefence before the Tribunal that the insurer could not be asked topay compensation as per the indemnity clause contained in thecontract of insurance since there was a violation of policycondition. The violation cited by the third respondent is that thevehicle was plied without a valid permit.7.A copy of the permit issued to the said vehicle and a copy oforder passed pursuant to the surrender of the said permit have beenproduced and marked by the third respondent as Exs.B1 and B2respectively. Both the copies were certified to be true copies by theRegional Transport Officer, Salem. It is patent from Ex.B1 that apermit had been issued for the said Tipper lorry for a period of fiveyears from 25.08.1995 to 24.08.2000. However, the said permit wassurrendered on 30.03.1999 itself and an order accepting the saidsurrender was passed on 31.03.1999 as revealed by Ex.B2. It is notthe 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 saidsurrender a new permit was obtained and the same was in force as onthe date of accident. Thus there is no defect or infirmity in thefinding recorded by the Tribunal that the vehicle was plied on roadon the date of accident without covered by a valid permit. Therecannot be any second opinion that plying the goods vehicle withoutcovered by a valid permit is in violation of a vital condition of thecontract of insurance. Therefore, the finding of the Tribunal thatthe second respondent/owner of the offending vehicle had committed anact of violation of a policy condition also cannot be interfered within this appeal or cross objection. The main contention of the partiesrevolves around the consequences of such a violation of a policycondition. Whether violation of such a policy condition will resultin total exoneration of the Insurance Company of its liabilitytowards the third party victims also is the bone of contention inthis appeal and the cross objection.8.The learned counsel for the appellant, drawing the attentionof this Court to the latest Judgment of the Hon'ble Supreme Court inPremkumari and others V. Prahlad Dev and others reported in CDJ 2008SC 076, contended that in case of absence of coverage alone theinsurer shall be exonerated of its liability towards third party inentirety and that in case of violation of policy condition givingrise to a right to the insurer to rescind the contract of insurance,the liability of insurer towards the third party should be heldabsolute with a rider that the insurer shall be at liberty to recoverthe amount from the insured after satisfying the claim made by thethird party victims. 9.On the other hand, the learned counsel for the secondrespondent/cross objector, relying on the Judgment of the learnedSingle Judge of Andra Pradesh High Court in United India InsuranceCompany Limited V. Shekamma and others reported in 1995 ACJ 86, wouldcontend that in case of expiry of permit before the date of accident,the insurer's liability cannot be negatived on the sole ground thatthe insured did not possess a valid permit when the accidentoccurred. Of course, in paragraph 7 of the said Judgment, the learnedJudge of the Andra Pradesh High Court expressed a view that it wasenough to show that there was a valid permit as on the date of issueof the policy of insurance and the absence of such a permit as on thedate of accident would not absolve the insurer from its liability toindemnify the insured. With great respect, this Court is not in aposition to accept the same to be reflecting the correct propositionof law in this regard. 10.In the Judgment relied on by the learned counsel for theappellant cited supra, the Hon'ble Supreme Court has clearly heldthat the violation of any one of the policy conditions willdefinitely 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 OrientalInsurance Company Limited V. Meena Variyal and Others reported in(2007) 5 SCC 428 and Swaran Singh's case reported in (2004) 3 SCC 297and Laxmi Narain Dhut's case reported in (2007) 3 SCC 700, theHon'ble Apex Court in Premkumari and others V. Prahlad Dev and Others(cited supra) quoted the following observations made in Laxmi NarainDhut's case with approval and held that in cases of violation ofpolicy conditions the insurer's liability towards the third partyshall not be affected and that in such cases, the insurer had to paythe compensation decided by the Tribunal to the claimants and thenrecover the same from the insured. The relevant portion of the saidJudgment is extracted hereunder:-"In view of the above analysis the following situationsemerge:1.The decision in Swaran Singh case has no application tocases other than third party risks.2.Where originally the licence was a fake one, renewalcannot cure the inherent fatality.3.In case of third party risks the insurer has to indemnifythe amount, and if so advised, to recover the same from theinsured.4.The concept of purposive interpretation has noapplication 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 factthat there had been violation of a policy condition as the vehiclehad been plied without a valid permit, the liability of the thirdrespondent is to be restricted to making payment to the claimant witha right to recover the same from the insured namely, the secondrespondent/cross objector by levying execution in the very same MCOPwithout having the need to file a separate suit or original petition.To the extent indicated above, the Civil Miscellaneous Appealshall stand allowed. Cross Objection is dismissed. There shall be noorder as to costs.Sd/-Deputy Registrar./true copy/Sub Asst. Registrar.Sgl https://hcservices.ecourts.gov.in/hcservices/ ToThe Principal Subordinate Judge,Motor Accidents Claims Tribunal,Erode.1 cc to Mr.A.K. Kumarasamy, Advocate, SR. 361121 cc to Mr.C.aR. Krishnamurthy, Advocate, SR. 35446C.M.A.No.1512 of 2002KSJ (CO)kk 29/7