LexS. IYYAPAN versus M/S UNITED INDIA INSURANCE COMPANY LTD. AND ANOTHER
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[2013] 7 S.C.R. 45 S. IYYAPAN v. M/S UNITED INDIA INSURANCE COMPANY LTD. AND ANOTHER (Civil Appeal No. 4834 of 2013) JULY 1, 2013. [SURINDER SINGH NIJJAR AND M.Y. EQBAL, JJ.] MOTOR VEHICLES ACT, 1988: A B c ss.149 read with ss.146 and 147- Insurer to satisfy awards against third party risk - Fatal accident - Held: It is the statutory right of a third party to recover the amount of compensation from the insurer - Insurer cannot disown its liability on the ground that although the driver was holding a licence to drive D a light motor vehicle,it contained no endorsement to drive commercial vehicle - It is for the insurer to proceed against the insured for recovery of the amount in the event there has been violation of any condition of insurance policy - In the instant case, driver was holding a valid driving licence to drive E light motor vehicle - Merely because he did not get any endorsement in the driving licence to drive the Maxi Cab, which is a light motor vehicle, High Court has committed grave error of law in holding that insurer is not liable to pay compensation because driver was not holding licence to drive commercial vehicle - Judgment of High Court set aside -- Insurer is liable to pay compensation awarded. F The husband of respondent no. 2-claimant died as a result of the accident caused by a Maxi Cab. The Tribunal held that the driver possessing licence to drive light G motor vehicle was entitled to drive the said Maxi Cab, and awarded compensation to be paid by the respondents before it. In the appeal filed by the Insurance Company, the High Court held that since the vehicle was being used 45 H 46 SUPREME COURT REPORTS (2013] 7 S.C.R. A as a taxi, i.e. a commercial vehicle, the driver was required to hold an appropriate licence.and, there being a breach of the condition of the contract of insurance, the Insurance Company was not liable to pay any compensation to the claimant. B In the instant appeal, the question for consideration before the Court was: "can an Insurance Company disown its liability on the ground that the driver of the vehicle although duly licensed to drive light motor vehicle C but there was no endorsement in the licence to drive light motor vehicle used as commercial vehicle". Allowing the appeal, the Court HELD: 1.1 The right of the victim of a road accident 0 to claim compensation is a statutory one. Section 149 of the Motor Vehicles Act, 1988 made it mandatory on the part of the insurer to satisfy the judgments and awards against persons insured in respect of third party risk. [para 2 and 9) [49-C; 53-F-G] E Skandia Insurance Co. Ltd. v. Koki/aben Chandravadan 1987 (2) SCR 752 = (1987) 2 SCC 654; Sohan Lal Passi v. P. Sesh Reddy & Ors. 1996 (3) Suppl. SCR 647 = (1996) 5 SCC 21; Ashok Gangadhar Maratha v. Oriental Insurance Co. Ltd. 1999 (2) Suppl. SCR 202 = 1999 (6) SCC 620; New India F Assurance Company, Shim/a v. Kam/a & Others 2001 (2) SCR 797 = (2001) 4 SCC 342; National Insurance Co. Ltd. v. Swaran Singh & Ors. 2004 (1) SCR 180 = (2004) 3 SCC 297; National Insurance Co. Ltd. v. Kusum Rai and Others, 2006 (3) SCR 387 = (2006) 4 SCC 250; National Insurance G Company Ltd. v. Annappa /rappa Nesaria alias Nesaragi and Others 2008 (1) SCR 1061 = 2008 (3) sec 464- relied on. H Oriental Insurance Co. Ltd. v. Nanjappan 2004 (2) SCR 365 = 2004 (13) sec 224 - referred to. S. IYYAPAN v. UNITED INDIA INSURANCE COMPANY 47 LTD. AND ANOTHER 1.2 The heading "Insurance of Motor Vehicles A against Third Party Risks" given in Chapter XI of the 1988 Act (Chapter VIII of 1939 Act) itself shows the intention of the legislature to make third party insurance compulsory and to ensure that the victims of accident arising out of use of motor vehicles would be able to get B compensation for the death or injuries suffered. The provision has been inserted in order to protect the persons travelling in vehicles or using the road from the risk attendant upon the user of the motor vehicles on the road. The legislature has made it obligatory that no motor c vehicle shall be used unless a third party insurance is in force. Sections 146 and 147 make it clear that in certain circumstances the insurer's right is safegu~rded but in any event the insurer has to pay compensation when a valid certificate of insurance is issued notwithstanding D the fact that the insurer may proceed against the insured for recovery of the am
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