Dharman and Another Vs. N.C. Srinivasan and Others - Court Judgment

Excerpt:
motor vehicles - compensation - section 96 (2) of motor vehicles act, 1939 - whether appellant liable to pay compensation - facts revealed accident was due to rash and negligent driving of second appellant - defence that on sale of vehicle during period of cover policy had elapsed not available to insurer under section 96 (2) as against third party claims - held, appellant liable to pay compensation. - - (2) both the tribunal as well as the learned judge, erred in placing reliance on ex. sub-section (6) also indicates clearly how sub-sec. (6) clearly contemplates that he cannot take any defence not mentioned in sub-sec. (2) clearly provides that an insurer made a defendant to the action is not entitled to take any defence which is not specified in it. kokilaben chandravadan, 1987 acj.....orderpadmini jesudurai, j.1. the ownerand driver respectively of a motor cycle against whom the motor accidents claims tribunal, had passed an award, confirmed by this court in appeal, have preferred this letters patent appeal.2. facts briefly are : on 6-3-1980 at 7.05 p. m. motor cycle bearing registration no. tmc 6883 which had formerly belonged to the third respondent herein and on the day of the accident had belonged to the first appellant, was driven in a rash and negligent manner by the second appellant and dashed against the first respondent-claimant and caused him serious injuries. the first respondent filed o. p. 525 of 1980 under sec. 110-a of the motor vehicles act (hereinafter referred to as the act) before the motor accidents claims tribunal, madras, claiming a compensation.....

Judgment:
ORDER

Padmini Jesudurai, J.

1. The ownerand driver respectively of a motor cycle against whom the Motor Accidents Claims Tribunal, had passed an award, confirmed by this Court in appeal, have preferred this Letters Patent Appeal.

2. Facts briefly are : On 6-3-1980 at 7.05 p. m. motor cycle bearing registration No. TMC 6883 which had formerly belonged to the third respondent herein and on the day of the accident had belonged to the first appellant, was driven in a rash and negligent manner by the second appellant and dashed against the first respondent-claimant and caused him serious injuries. The first respondent filed O. P. 525 of 1980 under Sec. 110-A of the Motor Vehicles Act (hereinafter referred to as the Act) before the Motor Accidents Claims Tribunal, Madras, claiming a compensation of Rs. 25,000/-.

3. The appellants resisted the claim contending that the accident was not due to the rash and negligent driving of the second appellant, but was due to the negligence of the first respondent in suddenly crossing the road. The second respondent, the Insurance Co., resisted its liability contending that the vehicle belonged to the third respondent herein, with whom alone there was a valid policy of insurance and the vehicle having been transferred during the period of cover to the first appellant, the second respondent could not be called upon to indemnify the first appellant. On this counter, the third respondent was also made a party and he chose to remain ex parte.

4. The Tribunal, on the material placed before it, held that the accident was due to the rash and negligent driving of the vehicle by the second appellant and assessed the compensation at Rs. 6,500. Holding that because the vehicle had been transferred by the third respondent to the first appellant even before the date of the accident, neither the third respondent, the erstwhile owner, nor his insurer, the second respondent, could be held liable. An award was passed against the appellants alone. C.M.A. 172 of 1982 filed by the appellants in this Court was dismissed. Hence this Letters Patent Appeal.

5. Thiru S. Subbiah, learned counsel for the appellants, urged the following two contentions in support of his prayer--

(1) The vehicle having been insured with the second respondent and the accident having taken place during the period of cover and the policy of insurance not having been terminated during the period of cover in any one of the modes contemplated in Sec. 96(2) of the Act, it is not open to the second respondent, the Insurer, to avoid the liability against third parties by taking a plea not available to it under Sec. 96(2) of the Act, contending that the policy had come to an end on the transfer of the vehicle from the third respondent to the first appellant.

(2) Both the tribunal as well as the learned Judge, erred in placing reliance on Ex. P. 6, the rough sketch of the scene prepared by P. W. 3, the Investigating Officer, based purely on the statements recorded by him under Sec. 161 Cr. P.C. which were not admissible in evidence. The finding that the accident was due to the rash and negligent driving of the second appellant was, therefore, unsustainable.

6. Thiru Madangopal Rao, learned counsel for the second respondent, countered the above contentions.

6A. Contention No. 1 -- The first contention of the learned counsel for the appellants is that this being a claim by a third party, it is not open to the insurer, the second respondent, to escape the liability accrued during the period of cover of the policy of insurance by putting forward any defence not contemplated in Sec. 96(2). According to the learned counsel, a policy of insurance against third party claims, could come to an end only in the manner provided under Sec. 96(2)(a) and (c) of the Act. The short question, therefore, is whether a plea that the policy of insurance has lapsed on the transfer of a vehicle, is a plea that could be put forward under Sec. 96(2) as against a third party claim.

7. According to Sec. 96(2) of the Act, an insurer, if he is to he called upon to indemnify his insured, should be made a party to the proceedings to the limited extent of enabling him to put forward certain defence made available to him in that sub-section itself. It is therefore, clear that the defence of an insurer is directly limited only to what the Statute has chosen to provide in S. 96(2). That the insurer cannot take any defence, not specifically provided for under S. 96(2) of the Act, has been laid down by the Supreme Court as early as in 1959 in British India General Insurance Co. Ltd. v. Itbar Singh, : [1960]1SCR168 , in the following words (at Pp. 1333-34 of AIR).

'Now the language of sub-see. (2) seems to us to be perfectly plain and to admit of no doubt or confusion. It is that an insurer to whom the requisite of notice of the section has been given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely, after which comes an enumeration of the grounds. It would follow that an insurer is entitled io defend on any of the grounds enumerated and no others. If it were not so, then of course no grounds need have been enumerated. When the grounds of defence have been specified, they cannot be added to. To do that would be adding words to the statute.

Sub-section (6) also indicates clearly how sub-sec. (2) should be read. It says that no insurer to whom the notice of the action has been given shall be entitled to avoid his liability under sub-sec. (1) otherwise than in the manner provided for in sub-sec. (2). Now the only manner of avoiding liability provided for in sub-sec. (2) is by successfully raising any of the defences therein mentioned. It comes then to this that the insurer cannot avoid his liability except by establishing such defences. Therefore, sub-sec. (6) clearly contemplates that he cannot take any defence not mentioned in sub-sec. (2), If he could, than he would have been in a position to avoid his liability in a manner other than provided for in sub-sec. (2). That is prohibited by sub-sec. (6). We, therefore, think that sub-sec. (2) clearly provides that an insurer made a defendant to the action is not entitled to take any defence which is not specified in it.'

8. Learned counsel for the second respondent however, brought to our notice a judgment of a single Judge of this Court in the South India Insurance Co. Ltd. v. Lakshmi, : AIR1971Mad347 wherein the learned Judge had observed that the defences that are open to an insurer under S. 96 of the Act, in a claim by third parlies, cannot be said to he exhaustive. These observations however, cannot be sustained in view of the decision of the Supreme Court, referred to above. It is, therefore, clear that in a claim by a third party, the defences of an insurer are strictly limited to what the Statute has chosen to provide under S. 96(2).

9. A reading of S. 96(2) would show that even during the period of cover, it is open to the insurer to avoid third party claims, by pulling forward the defence made available to it under S. 96(2)(a), whereby the policy could be brought to an end even before its expiration by efflux of time. Once a certificate of insurance has been issued under S. 95(4) of the Act, and an accident occurs during the period of cover, the only two situations that the Act contemplates, which would be available to defence by the insurer to contend that the policy is not in force, are found in S. 96(2)(a) and (e) which arc as follows --

'(a) that the policy was cancelled by mutual consent or by virtue of any provision contained therein before the accident giving rise to the liability, and that either the certificate of insurance was surrendered lo the insurer or that the person to whom the certificate was issued has made an affidavit stating that the certificate has been lost or destroyed, or that either before or not later than fourteen days after the happening of the accident the insurer has commenced proceedings for cancellation of the certificate after compliance with the provisions of S. 105;.................

(c) that the policy is void on the ground that it was obtained by the non-disclosure of a material fact or by a representation of fact which was false in some material particular.'

10. An analysis of S. 96(2)(a) shows that the policy could be cancelled (1) by mutual consent, (2) by virtue of any provision contained therein before the accident giving rise to the liability and the certificate of insurance is surrendered; (3) either before or not later than fourteen clays after the accident, the insurer has commenced proceedings for cancellation of the certificate, after compliance with the provisions of S. 105 of the Act, which requires that when the insurer cancels or suspends a policy, he shall within seven days notify to the registering authority the effect of such cancellation or suspension. Section 96(2)(c) enables the insurer to contend that the policy itself is void on the ground that it was obtained by non-disclosure of material fact or misrepresentation.

11. Section 96(2) of the Act does not contemplate any other situation, which would enable the insurer to contend, as against third party, regarding an accident that had occurred during the period of cover, that the policy has come to an end. One cannot miss the fact that Chap. VIII has been introduced into the Motor Vehicles Act making insurance of motor vehicles compulsory against third party risks. The Motor Vehicles Act, being a special Act and the provisions of Chap. VIII having been introduced to serve a particular purpose, should be so construed as not to defeat the object for which the provisions have been enacted, by importing into it, principles related with the general law of insurance or general law of contracts. Section 103-A merely indicates the procedure by which, on the transfer of a vehicle contractual rights inter se insurer, transferor, and transferee could be regulated for working out remedies available under S. 96(3) proviso and S. 96(4) and has no reference to the liability of the insurer against third parly claims during the period of cover. It could never have been the intention of the Legislature that in the event of transfer of ownership of the vehicle during the period of cover, the rights of third party victims of accidents occurring during the period of cover, would depend on whether or not, parties choose to act under S. 103-A. The wordings in S.96(1) that the insurer shall pay notwithstanding that he might have avoided or cancelled the policy make this interpretation imperative.

12. The Supreme Court in New Asiatic Insurance Co. v. Pessumal Dhanmal Aswani, : [1964]7SCR867 has given guidelines regarding the interpretation of the various provisions of Chap. VIII of the Act.

'Chapter VIII of the Ad, it appears from the headings, makes provision for insurance of the vehicle against third party risks, that is to say, its provisions ensure that third parlies who suffer on account of the user of the motor vehicle would be able to get damages for injuries suffered and that their ability to get the damages will not be dependent on the financial condition of the driver of the vehicle whose user led to the causing of the injuries. The provisions have to be construed in such a manner as to ensure this object of the enactment.'

13. One cannot also miss the trend of the decisions of the Supreme Court in interpreting the provisions of this Act. More recently, in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan, 1987 ACJ 411 : AIR 1987 SC 1184. the Supreme Court, while interpreting the exclusion clause contained in the policy of insurance, held that the exclusion clause has to be read down, in order that it is not at war with the main purpose of the provisions enacted for the protection of victims of accidents and that in order to define the intention of the Legislature in the course of interpretation of the relevant provisions, there can scarcely be a better test, than that of probing into the motive and philosophy of the relevant provisions, keeping in mind the goals to be achieved by enacting the same. The same strict interpretation is seen in a later pronouncement of the Supreme Court in Guru Govekar v. Filomena F. Lobo, : AIR1988SC1332 .

14. We would also refer to a Full Bench decision of the High Court of Andhra Pradesh in Madineni Kondiah v. Yaseen Fatima, 1986 ACJ 1 : AIR 1986 Andh Pra 62 wherein the court held that in a claim by a third party it is not open to the insurer under S. 96(2) of the Act, to raise a plea that thepolicy had lapsed even during the period of cover by the vehicle being sold to someone else. We, therefore, hold that the defence that on sale of the vehicle during the period of cover the policy had elapsed, is not one that is available to the insurer under S. 96(2) as against third party claims.

15. Contention No. 2:-- According to the learned counsel for the appellants, the markings in Ex.A.6, the rough sketch of the scene made by PW3, the Investigating Officer, are based on statements recorded by him under S. 161, Cr.P.C. which are inadmissible in evidence and as such those markings in Ex.P.6 are to be eschewed from consideration. The findings of the Tribunal, as well as of, the learned Judge, based on those markings are therefore, unsustainable. Reliance was placed upon a decision of the Supreme Court in Tori Singh v. State of U. P. : [1962]3SCR580 . The bar under S. 161, Cr.P.C. is applicable only to criminal trials. The statements recorded by the Investigating Officer under S. 161, Cr.P.C. could be looked into in other proceedings, provided of course, they are properly proved, either by examining the Investigating Officer, who recorded the statements or by examining the witnesses themselves. Once proved, those statements could be relied on, in proceedings like the present one. If, however, those statements arc not proved, they would come within the category of hearsay evidence and would not be admissible. In the instant case, PW 3 has stated that he visited the scene of accident and that the driver of the motor cycle and one Kupparaj were available there and that they pointed out the scene and on the basis of that he had drawn Ex.P.6, Ex.P.6, therefore could be relied on.

16. Both the Tribunal as well as the learned Judge have held, that the accident was due to the rash and negligent driving of the second appellant, mainly because the accident had occurred in the eastern extremity of the road, while the vehicle was coming from north to south and the first respondent was proceeding from west to cast. The width of the road was 7.55 metres. The first respondent, therefore, had crossed about 3/4ths of the road, and was about to reach the eastern pavement when the accident occurred. This rules out any negligence on the part of the first respondent and clearly spells out rashness and negligence on the part of the second appellant. We concur with the findings of the Tribunal as well as the learned Judge to that effect.

17. In the result, the appeal is partly allowed with costs, and there will be an Award for a sum of Rs. 4500, as against respondents 2 and 3 and appellants 1 and 2, the amount being initially payable by the insurer, the second respondent herein. This amount shall carry interest at 12 percent per annum from the date of the filing of the claim petition before the Motor Accident Claims Tribunal till the date of payment. It is needless to say that it would be open to the second respondent to work out its remedies against the parties concerned either under S. 96(3) proviso or under S. 96(4) of the Act. It is stated that the appellant had deposited one half of the amount which has since been withdrawn by the claimant. On the Insurance Company depositing the amount as directed above the appellants would be entitled to withdraw the amount which was deposited by them.

18. Appeal allowed in part.