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Judgment
Madhava Reddy, J.—This appeal is by the 4th Respondent in O.P. No. 88 of 1972 against the order of the Motor Vehicles Accidents Claims Tribunal (II Additional District Judge) Guntur, awarding a decree in a sum of Rs. 10,000/- payable with interest at 6% per annum towards compensation.
The lorry APK 1143 driven by the 3rd Respondent met with an accident resulting in instantaneous death of Vijaya Anjamma. The deceased was the wife of the 1st Respondent Petitioner and mother of Petitioners 2 to 5 and the daughter of the 6th Petitioner. The 1st and 2nd Respondents are stated to be the owners of the lorry and the 3rd Respondent is said to be its driver and the 4th Respondent is the insurance company with which the said lorry was insured. In column No. 14 of the performa petition filed for claiming the compensation, the 1st Respondent was described as the ''C'' Certificate, holder and the 2nd Respondent as the present owner of the said vehicle. The deceased was working as a grading cooli in the National Tobacco company and was earning Rs. 5/- to 6/- daily. The Petitioners claimed a compensation of Rs. 25,000/- against all the Respondents.
While the 1st Petitioner and the 3rd Respondents remained ex-parte, the 2nd Respondent filed a written statement inter alia pleading that he was not the owner of the lorry APK 1143 and that the lorry was not driven rashly or negligently. He further alleged that the deceased herself negligently came suddenly from the right side of the road and struck against the rear portion of the lorry and fell down. According to him, the accident was the result of the negligence of the deceased. He also disputed that the deceased was earning Rs. 6/- per day and contended that the compensation claimed cannot be allowed.
The insurance company, the 4th Respondent also denied that the lorry was driven rashly and negligently and averred that the deceased got confused and suddenly ran across the road and struck against the vehicle. The claim was stated to be arbitrary and out of all proportion to the earning capacity and capability of the deceased. The insurance company took a specific plea that the 2nd Respondent was the owner of the lorry APK 1143 on the date of the accident and that he had not insured the vehicle with the 4th Respondent-company. The 1st Respondent, in whose name the vehicle was insured with the 4th Respondent company, had no insurable interest on the date of the accident as he had parted with the ownership of the vehicle prior to that date. The insurance policy was not transferred to the 2nd Respondent, nor was the 3rd Respondent who was driving the vehicle at the time of the accident the employee of the 1st Respondent in whose name the insurance policy was taken. Thus both the 1st and 4th Respondents disclaimed all liability for meeting the claim of the Petitioners in respect of the said accident. In the additional written statement filed by the 4th Respondent, a further plea was taken that the driver was not duly licensed at the time of the accident to drive a heavy vehicle like the lorry APK 1143 and as such the insurance company was absolved from all liability.
The Claims Tribunal, on appreciation of the evidence on record held that the accident occurred as a result of the negligence and rashness on the part of the 3rd Respondent, the driver of the lorry APK 1143, that the 3rd Respondent was having a driving licence on the date of the accident and that the 4th Respondent.-insurance company was liable for the payment of compensation. The Tribunal found that the earning capacity of the deceased was Rs. 5/- per day and on that basis awarded a sum of Rs. 10,000/- as compensation to the Petitioners. The Tribunal did not agree with the contention of the 4th Respondent that the 1st Respondent had parted with the ownership of the vehicle and therefore was absolved from paying compensation. In the result, it decreed the Petitioner''s claim for compensation in a sum of Rs. 10,000/- with interest at 6% per annum against Respondents 1, 3 and 4 and dismissed it against the 2nd Respondent. Only the 4th Respondent has preferred appeal.
In this appeal, Mr. J.V. Suryanarayana Rao, learned Counsel, for the Appellant-insurance company, contends (i) that the 3rd Respondent-driver was not holding any licence for driving a heavy vehicle and consequently the insurance company was absolved from its liability to pay any compensation; (ii) that on the date of the accident, the 2nd Respondent was the owner of the vehicle and therefore the Appellant insurance company was not liable to pay any compensation in respect of the accident in question and (iii) that the amount of compensation awarded is exorbitant and wholly disproportionate to the loss of earnings of the deceased.
It is the admitted case of all the parties that the 3rd Respondent was driving the vehicle. In the counters originally filed, none of the Respondents took the plea that the 3rd Respondent did not possess a licence to drive a heavy vehicle. The 3rd Respondent was prosecuted for an offence u/s 304-A I.P.C., for causing the death of Vijaya Anjamma by rash and negligent driving and also for offences punishable u/s 337 I.P.C. and Section 89(a) and (b) read with Section 118-(A) of the Motor Vehicles Act. As can be seen from the judgment in C.C. No. 236/72 on the file of the III Additional Munsif Magistrate, Guntur, he was convicted for the said offences and sentenced to undergo six months rigorous imprisonment for offences punishable u/s 304-A I.P.C. and to one month''s simple imprisonment for offences punishable under the Motor Vehicles Act. Against his conviction and sentence he preferred an appeal; Crl. A. No. 42/73 on the file of the Sessions Judge, Guntur. The learned Sessions Judge by his judgment dated 17-9-1973 (Ex. A-8) confirmed the conviction and sentence. The finding of the criminal Court, of course, is rot binding on the Claims Tribunal and is not by itself sufficient to hold that the 3rd Respondent was the driver of the vehicle on that fateful day. However, when the insurance company pleads that it is absolved from the liability to pay compensation for the reason that the vehicle was driven by a person who did not possess a valid driving licence to drive a heavy vehicle, it is for the insurance company to establish that fact positively. The driver of the vehicle has remained ex parte and the Insurance company has not chosen to examine the driver or take steps to produce the licence issued to him.
Of the two witnesses examined on behalf of the insurance company, R. W. 1 is the Assistant-in-charge of the Motor Claims Department. In his examination in chief, he merely asserts "as far as I know, the driver had no licence to drive the vehicle on the date of the accident." Our office made enquiries in the Office of the Regional Transport Officer, Guntur and learned that the driver had no licence to drive the vehicle that day. The insurance company, however, did not, choose to examine any one from the Regional Transport Officer''s office, nor did it choose to call for the production of the licence issued to the 3rd Respondent. It merely got a notice, Ex. B-2 issued to the 2nd Respondent to produce the driver in court to give evidence. This step taken by the 4th Respondent is of no avail, for the 2nd Respondent himself denies that he was the owner of the vehicle and that he had authorised the 3rd Respondent to drive the vehicle. In response to the 4th Respondent''s notice, the 2nd Respondent therefore, could not be expected to produce the 3rd Respondent for being examined as a witness. Nothing prevented the 4th Respondent from summoning the driver as a witness. It was not within the power of the 2nd Respondent to produce the 3rd Respondent as a witness in the case. In any event, on this account, no inference adverse to the Petitioner''s interest could be drawn. The 4th Respondent ought to have taken effective steps to examine the driver.
R.W. 1 in his cross-examination had to admit that he does not know the driver personally. He also admits that he did not contact the driver. He deposed that his only source of knowledge that the 3rd Respondent was not having a driving licence is stated to be 3rd Respondent''s own admission in the judgments of the Criminal Court, Exs. A-7 and A-8. He admits that he did not verify from any other source whether the 3rd Respondent had a licence or not. He claims that only their Advocate made enquiries about it. The name of that Advocate is not revealed. R.W. 1 claims to have written to the 1st Respondent to furnish the drivers licence and other particulars but that the 1st Respondent did not furnish. He admits that none from their office went to the Regional Transport Officer''s office and enquired whether the 3rd Respondent was granted a licence or not to drive a lorry.
The only other witness for the 4th Respondent states that he does not know whether the 3rd Respondent had a driving licence on the date of the accident.
P.W. 1 has examined himself and deposed that the 3rd Respondent was driving the lorry APK 1143 rashly and negligently near I.L.T.D. company when it met with the accident in question. Though he deposed that he did not know whether the 3rd Respondent had a driving licence at the time of the accident, it cannot be presumed that the lorry was being driven in Guntur Town by a person who did not possess a licence. In any case, it was for the 4th Respondent who seeks to avoid the liability to establish that the 3rd Respondent did not possess a valid licence to drive a heavy vehicle on that day, which it has miserably failed.
In this state of evidence, it cannot be held that the 3rd Respondent who was driving the vehicle when it met with the accident was not holding a licence. I see no reason to disagree with the finding of the court below that the lorry APK 1143 was driven by a person having a driving licence on the date of the accident and confirm the same.
The question whether the 4th Respondent insurance company is liable to meet the claim for compensation in respect of the accident in question depends upon whether the 1st Respondent, who insured the vehicle with the 4th Respondent-company continued to be the owner of the vehicle on the date of the accident or had transferred it to the 2nd Respondent. According to the 4th Respondent, the 1st Respondent had parted with the ownership even by the date of the accident and therefore it is not liable to meet the claim in respect of the accident. While the 1st Respondent has remained ex-parte, the 2nd Respondent has denied that he had become the owner of the vehicle or had anything to do with the vehicle. There is no dispute that if the 1st Respondent continued to be the owner of the vehicle under the policy of insurance taken out by him in respect of this vehicle, the 4th Respondent-company would be liable to meet the claim, provided, of course, it was driven by a duly licensed driver. The insurance policy is marked Ex. B-1. The Petitioners in their claim petition stated that the ''C'' Certificate in respect of this lorry stood in the name of the 1st Respondent. There is, therefore no doubt that the 1st Respondent is the registered owner of the vehicle. In the petition, they described him as such and they described the 4th Respondent as its present owner and they held both of them liable along with the 3rd Respondent, who drove the vehicle. While the 2nd Respondent denied that he is the owner and the 1st Respondent remained ex-parte, it is the 4th Respondent that took a specific plea that the 1st Respondent had transferred the ownership of the vehicle to the 2nd Respondent. It is, therefore, for the 4th Respondent to establish that the ownership of the vehicle was transferred by the 1st Respondent to the 2nd Respondent by the date of the accident. It is significant to note that none of the Respondents nor the amount of consideration for which it was sold have stated as to the date on which the vehicle was sold. No sale-note is produced. Of course the general law of contracts for the sale of a car or lorry which constitutes moveable property a sale-note in writing is not necessary. But, whenever there is a transfer of ownership of the vehicle, the ''C'' certificate also has to be transferred and is normally transferred. The purchaser would therefore take a receipt for the payment of consideration and an application for the transfer of the Registered Certificate in his name addressed to the concerned transport authority. Production of these documents is necessary for the transfer of ''C'' certificate It is not as if the 1st Respondent and the 2nd Respondent are in any way related to each other so as to allow the ''C'' Certificate to stand in the name of the 1st Respondent, notwithstanding the sale of the vehicle to the 2nd Respondent. The two witnesses, examined on behalf of the insurance-company, have no personal knowledge about the sale of the vehicle. Though R.W. 1 asserts that the 1st Respondent sold the vehicle to the 2nd Respondent before the date of the accident and that possession of the vehicle was also delivered to the 2nd Respondent and the 2nd Respondent was plying the same on the date of accident. In the cross-examination he admitted that he did not know on what date the 1st Respondent sold the vehicle to the 2nd Respondent, nor did he know on what date he gave possession of the vehicle. He further admitted that it was the 1st Respondent who had informed him about the accident on 6.3.1972 and that the insurance company sent the claim forms to the 1st Respondent. If the 1st Respondent had parted with the ownership and possession of the vehicle even by the date of the accident, he would not have taken the trouble of informing the 4th Respondent about the accident and would not have requested for claim forms being sent to him. Further, if as deposed by R.W. 1, the 1st Respondent bad sold the vehicle to the 2nd Respondent before the date of the accident, it would not have sent the claim forms to the 1st Respondent. It would have replied that they were not liable to meet the claim as the 1st Respondent had parted with the ownership and possession of the vehicle by the date of accident.
No other evidence is adduced by the insurance company in this behalf. The 2nd Respondent was examined as P.W. 3, in C.C. No. 276/72 on the file of the III Addl. Munsif Magistrate, Guntur as the owner of the vehicle in that case. P.W. 3 therein, deposed that he was not the owner of the vehicle and denied that he had purchased the same on 6.2.1972 from the 1st Respondent and that he had engaged the 3rd Respondent as the driver to drive that lorry. On the strength of the evidence of P.W. 3 and other evidence., the 3rd Respondent was found to be the driver of the lorry and was found to be guilty of the offences for which he was charged and convicted. Exs. A-7 and A-8 establish the guilt of the accused. But, these judgments of the Criminal Court are only relevant for the purpose of finding if the accused was found guilty or not. There was no issue in that case as to who the owner of the lorry was. What was relevant in that case was whether the accused was driving the lorry rashly and negligently and not whether the vehicle was owned by the 1st Respondent or the 2nd Respondent herein. Any statement of the 2nd Respondent therein on being examined as a witness (P.W. 3 therein) in the Criminal Court cannot be of any assistance to the insurance company in this claim for compensation.
The 2nd Respondent who is examined as R.W. 2 categorically denied that he was the owner stated that he has nothing to do with the vehicle APK 1143 and that the 1st Respondent did not sell that vehicle to him. He also deposed that he has nothing to do with the driver, the 3rd Respondent.
There is no evidence, in this case, of establish that the 1st Respondent who was the admitted owner of the lorry and who continues to be the resgisterd owner of the lorry with the ''C'' Certificate standing in his name and who had insured the lorry with the 4th Respondent and had taken out insurance policy Ex. B-l had sold it to the the 2nd Respondent and delivered possession of the same to him on or before the date of the accident. When his previous deposition in C.C. No. 236/72, Ex. B-3 was put to him, while admitting that he has made such a statement, he explained that he had done so on account of the police pressure. He also further elaborated that a Head Constable was present in the court when he was giving evidence and on account of his pressure he gave evidence that way. He further deposed that he was cited as witness because he was a lorry broker and the 1st Respondent was not then available and under police pressure he deposed that he was the owner of the lorry and that the 3rd Respondent was his driver. The previous deposition is not evidence. It could be used only for contradicting R.W. 2, but it cannot be used as positive evidence to prove that the 2nd Respondent was the owner of vehicle on the date of the accident. By discrediting the evidence of R.W. 2, the transfer in his favour does not stand proved. There is no other evidence in this case to establish a transfer of the vehicle by the 1st Respondent to the 2nd Respondent by the date of the accident. In view of the fact that the Petitioners themselves had stated in the claim petition that the 2nd Respondent was the present owner, the 4th Respondent contends that there was no further obligation upon him to establish that the 1st Respondent had parted with the ownership of the vehicle by the date of the accident. It is true that the Petitioners have stated that both the 1st and 2nd Respondents are the owners. The wrong description of the 2nd Respondent as the owner does not establish that the 1st Respondent had transferred the vehicle to the 2nd Respondent and that too by the date of the accident. That apart, the Petitioner also categorically stated that the 1st Respondent was still the registered owner of the vehicle, they did not state that it was transferred to the 2nd Respondent. Further, this contention ignores the fact that the claim petition was filed on 21.4.1972, while the accident took place on 15.2.1972. The averment that the 2nd Respondent is the present owner of the vehicle does not necessarily mean that he was the owner of the vehicle even on the date of the accident. It could as well mean that on the date of filing of the petition the 2nd Respondent was the owner. Even in his deposition P.W. 1 deposed that his statement that the 1st Respondent was the owner is correct. It was not elicited in the cross-examination of P.W. 1 as to what he meant by that statement. But, in view of the above discussion, I hold that there is no proof that the ownership of the lorry APK 1143 was transferred by the 1st Respondent to the 2nd Respondent by the date of the accident. Consequently, the 4th Respondent cannot evade his liability under the insurance policy, Ex. P. 1 issued in respect of this vehicle.
It is contended by M. Ella Reddy, learned Counsel for the Respondents-Petitioners that even if the finding of this question were to be otherwise, such a defence is not open to the insurance company in view of Section 96(2) of the Motor Vehicles Act. For this proposition, the learned Counsel relies upon the decision of the Supreme Court in British India General Insurance Co. Ltd. Vs. Captain Itbar Singh and Others,
Mr. J.V. Suryanarayana Rao appearing for the Appellant argued that the above decision does not hold good in a case filed u/s 110-A of the Motor Vehicles Act.
The parties to a contract of insurance are the Insurer and the Insured under which the insurer agrees to indemnify the insured against the liability incurred by him. The insurance company is not directly liable to the person who has sufferred the bodily injury or the legal representatives of the person who may have met with death or bodily injury on account of the accident, the liability to compensate the third party is that of the insured and the insurer merely indemnifies the insured. By virtue of the provisions contained in Section 95(b) of the Motor Vehicles Act read with the terms of the policy of insurance that the person who has taken the policy is insured against any liability which may be incurred by him in respect of the death or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicles in a public place. This presupposes the subsistance of the insurance policy. One of the terms and conditions of the policy subject to which the insurer undertakes to indemnify the policy holder is that he should not have parted with the ownership of the vehicle. Once he parts with the ownership of the vehicle after taking the policy of insurance, the liability of the insurer cease?. It does not pass with the vehicle and does not render him liable to compensate the transferee for any loss, bodily injury or death occasioned by that vehicle after the transfer unless such a liability is expressly undertaken by the insurer. The transfer of the vehicle by the insured to a third party by itself does not transfer the liability of the insurer to compensate the purchaser of the vehicle. A Bench of this Court, to which I was a party, has taken this view in N. Kankalakshmi v. R.V. Subba Rao 1972 (1) A.P.L.J. 249, in the following words:
Where there was a sale of the vehicle, the failure to enter the name of the purchaser does not have the effect of retaining the title with the vendor. The sale is not rendered invalid. The vendor, who continues to be shown as the registered owner of the vehicle caused to be the real owner thereof as a result of the sale of the vehicle effected by him. After sale of the motor vehicle the vendor would not be liable for damages for the accident met by the vehicle merely because he continued to be shown m the registration certificate as the owner thereof. Further no vicarious liability on that ground can attach to him when the driver of the vehicle was not his employee. The insurance company also is not liable for the damages for the accident met by the vehicle when it had occurred after the insured had parted with the ownership of the vehicle and the purchaser was not insured with the company.
It is unnecessary to refer in detail to the several other decisions of the various High Courts which have taken a similar view. Suffice to note that in M. Bhoopathy v. Vijalakshmi Queensland Insurance Co. Ltd. v. Rajalakshmi Ammal and Ors. 1970 A.C.J. 104 and in the South India Insurance Co. Ltd. v. Lakshmi and Ors. 1971 A.C.J. 122, the Madras High Court has taken a similar view. In Gulab Bai Damodar Tapse v. Peter K. Sunder 1975 A.C.J. 100, the Bombay High Court has also held that once there is a sale of the vehicle and that vehicle meets with an accident subsequent to the sale, the insurance company cannot be held liable under the policy taken by the Vendor. This position of law is well settled but the question is whether, having regard to the provisions contained in Section 96(2) of the Motor Vehicles Act, such a defence is open to an insurance company in an action u/s 110-A claiming compensation for the death of the victim of the accident. In order to appreciate the contentions, it would be necessary to read Sub-sections (1) and (2) of Section 96 of the Motor Vehicles Act, which are as follows:
Duty of Insurers to satisfy judgments against persons insured in Respect of Third Party Risks:- (1) if, after a certificate of insurance has been issued under Sub-section (4) of Section 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under Clause (b) of Sub-section (1) of Section 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment-debtor, in respect of the liability, together, with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.
No sum shall be payable by an insurer under Sub-section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the court of the bringing of the proceedings or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely--
(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 to 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 Section 105: or
(b) that there has been a breach of a specified condition of the policy, being one of the following conditions namely;
(i) a condition excluding the use of the vehicle.
(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or
(b) for organised racing and speed testing or
(c) for a purpose not allowed by the permit under which the vehicle is used where the vehicle is a transport vehicle, or
(d) without side-car being attached, where the vehicle is motor cycle; or
(ii) a condition excluding driving by a named person or persons or by any person who is not duly licenced, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or
(iii) A condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or
(c) that the policy is void on the ground that it was obtained by the nondisclosure of a material fact or by a representation of fact which was false in some material particular.
This provision deals with the liability of the insurer to satisfy judgments against persons insured in respect of third party risks. One of the essential requirements to be fulfilled before the insurer is held liable to satisfy the judgment against the insured is that before or after the judgment against the insured, the insurer should have been given notice. That pre-supposes that the insured himself would be liable for compensating the third party for the damage caused by the accident. If one of the terms of the insurance stipulates that upon transfer of the ownership of the vehicle by the insured to the third party the insurer would be absolved from liability, the provisions of Section 96(2) obviously cannot apply. It is only, where the liability of the insurer subsists the question of the insurer satisfying the claims or indemnifying the insured arises. It is in cases where the liability of the insured is established, on what grounds the insurer may defend himself is laid down in Sub-section (2) of Section 96. In a case where the plea is that the insured himself was not liable for the reason that he had transferred the vehicle by the date of the accident, the restrictions contained in Sub-section (2) of Section 96 as regards the defence open to an insurer cannot apply. That sub-section only deals with the grounds on which the insurer may avoid his liability even though the person insured is liable for the accident.
The judgment of the Supreme Court in British India General Insurance Co. Ltd. Vs. Captain Itbar Singh and Others, arises out of a suit laid by third parties against the insured and the insurer. The Supreme Court laid down:
...that apart from the statute an insurer has no right to be made a party to the action by the injured person against the insured causing the injury Sub-section (2) of Section 96 however gives him the right to be made a party to the suit and to defend it. The right therefore, is created by statute and its content necessarily depends on the provisions of the statute. The question then really is, what are the defences that Sub-section (2) makes available to an insurer? That clearly is a question of interpretation of the sub-section. Now the language of Sub-section (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 notice of the action 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 to defend on any of the grounds enumerated. When the grounds of defence have been specified, they cannot be added to. To do that would be adding words to the statute."
That undoubtedly is the position under Sub-section (2) of Section 96. But the Supreme Court itself answering the contention that would create a hardship, observed in paragraph 16 of that judgment....
We are not furthermore not convinced that the statute causes any hardship. First, the insurer has the right, provided he has reserved it by the policy to defend the action in the name of the assured and if he does so, all defences open to the assured can then be urged by him and there is no other defence that he claims to be entitled to urge. He can thus avoid all hardship if any, by providing for a right to defend the action in the name of the assured and this he has full liberty to do. Secondly, if he has been made to pay something which on the contract of the policy he was not bound to pay, he can under the provision to Sub-section (3) and under Sub-section (4) recover it from the assured.
It is precisely having regard to this position of law in most insurance policies covering third party risks a specific provision is made entitling the insured to defend the action in the name of the assured. In the instant case as well, Ex. B-l, insurance policy issued to the 4th Respondent makes a provision to that effect in the following words:
No admission, offer, promises, payment or indemnity shall be made or given by or on behalf of the insured without the written consent of the Society which shall be entitled if it so desires to take over and conduct in the name of the insured the defence or settlement of any claim or to prosecute in the name of the insured for its own benefit any claim for indemnity or damages or otherwise and shall have full discretion in the conduct of any proceedings of in the settlement of any claim and the insured shall give all such information and assistance as the Society may require.
Even according to the Supreme Court in British India General Insurance Co. Ltd. Vs. Captain Itbar Singh and Others, , it was open to the insurance company to take over and conduct in the name of the insured the defence or setlement of any claim or to prosecute in the name of the insured for its own benefit for any claim for indemnity or damages or otherwise and conduct the proceedings. Having regard to the specific reservation made by the insurer-Appellant herein in the insurance policy, Ex. B-1 issued by it, if it so chose to invoke that power, all the defences that were open to the insured would have been available to the insurer. That power, the insured, however, did not choose to invoke in this case. Further, unless the Insured himself is liable to pay compensation for the damage to the property or for death of or an injury to a person, the insurer would not be liable, to pay compensation for the damage to the property had occurred while he owned the vehicle. In the instant case, having regard to the finding of fact reached above, that it is not proved that the 1st Respondent transferred the vehicle to the 2nd Respondent and that it is also not proved that the 3rd Respondent had no valid driving licence to drive the heavy vehicle on the date of the accident, it is unnecessary to go into the further question whether if the transfer of the vehicle were to be proved the insured would have been liable and in such a case whether other defences would have been open to him. I am of the view that the insurer can claim that he is not liable because the insured was not liable. If on the facts and circumstances of the case the insured is liable, the insurer may avoid liability to compensate the insured or the claimant only on the grounds specified in Section 96(2) unless, of course, he had reserved his right as in this case, in which event all the defences available to the insured himself would be available to him.
In view of the foregoing discussion, the insurance company is held liable to meet the claim referred to above.
A Bench of this Court in The Hindusthan Ideal Insurance Company Limited v. P. Ankaiah 1969 A.C.J. 60, discussing the effect of Section 96(2) on the question of defences available to the insurer in a proceeding u/s 110-B of the Motor Vehicles Act, held:
Section 96 would apply to the suits before the civil Courts and not to the Claims Tribunals. The insurance company has a right to raise the plea that the compensation demanded by the claimant is unjust or that the compensation awarded by the Claims Tribunal is excessive.
In that context, the Bench discussed whether the defences other than those mentioned in Section 96(2) were open to the insurer in the context of the history of Section 96 and observed:
...there can be little difficulty in reaching the conclusion that the Legislature intended to shut out only those defences which relate to the contract of insurance and on the basis of which liability is sought to be avoided. The Legislature could have never intended to shut out the defence to the insurance company such as mentioned above generally available to it under the general law. We are therefore satisfied that the insurance company can raise the defences that the claimant has claimed excessive or unjust compensation or that the Claims Tribunal having disregarded the principles on which damages can be ascertained decided to award excessively inordinate damages to the claimant.
Some of the defences which, according to the Bench, were available to the insurer notwithstanding anything contained in Sub-section (2) of Section 96 were questions of jurisdiction of the court where the action is brought, questions of limitation, questions of the standing of the party who has brought the action, or pure questions of law under which compensation is determined or principles relating thereto. The court held that these are some of the grounds which can certainly be raised by the insurance companies. The Bench observed:
We fail to see why the insurance company should now be deprived of such defence because of Section 96. Section 96(2) read with Sub-section (6) therefore has to be read in a manner which will not deprive the insurance company of its right to raise such pleas under the common law which do not effect the liability but affects something outside it.
However, having regard to the finding of fact reached by me above that the ownership of the vehicle did not stand transferred to a person other than the insured, how far the broad proposition laid down by the Bench in the above decision in the Hindustan Ideal Insurance Company Limited v. P. Ankaiah 1969 A.C.J. 60, is variance with the decision of the Supreme Court, in British India General Insurance Co. Ltd. Vs. Captain Itbar Singh and Others, , is a matter which need not be considered in this case.
The insurance company has also claimed that the amount of compensation awarded is excessive. However the evidence on record establishes that the deceased was earning at least Rs. 6/- daily. On that basis before the Tribunal it was urged that she would have earned at least Rs. 150/-per mensem. As she was aged 32 years at the time of the accident and would have been able to earn until she attained the age of 60 years, the loss of income incurred by the family after deducting the expenses that would have been incurred by the deceased would amount to Rs. 30,000/-. Even after deducting Rs. 5,000/- to Rs. 6,000/- towards lumpsum payment, the Petitioner contended that a compensation of Rs. 24,000/- should be paid. The Tribunal, however, taking the evidence of P.W. 5 into consideration that the deceased would have been engaged as a worker in the National Tabacco company only for seven or eight months in a year and not for a full year and that she would be earning at the rate of Rs. 5/- per day, awarded Rs. 10,000/- by way of compensation. There is no evidence to the contrary to warrant reduction of the amount of compensation any further. I, therefore, confirm the finding of the Tribunal in this behalf.
In view of the foregoing discussion, this appeal fails and is accordingly dismissed with costs.