Oriental Insurance Company Ltd., Palampur vs Bishan Dass and Others

P.D. Desai, C.J.—The defences open to the Insurance Company, are only those which are specified in Sub-section (2) of Section 96 of the Motor Vehicles Act, 1939 (hereinafter referred to as ''the Act'') and the only manner of itsavoiding liability is through the proof of defences therein mentioned (see : British India General Insurance Co. Ltd. Vs. Captain Itbar Singh and Others, and Skandia Insurance Co. Ltd. v. Kokilaben Chandravandan 1987 (1) Sc 648 : AIR 1987 SC 1184). The contract between the insurer and the insured may permit the insurer to avoid his liability under various circumstances. However, if those circumstances do not fall within the purview of Sub-section (2) of Section 96 of the Act, the insurer cannot invoke them in aid and escape liability for the third party risk. The terms of the contract between the insurer and the insured, which determine their inter se rights and liability, are not and should not be confused with the statutory liability of the insurer for the third party risk. The remedy available to the insurer in such a case is to proceed against-the insured for the breach of the contract and to claim reimbursement of the amount paid to satisfy the award.

In the present case, the use of the insured vehicle in question on a route for which there was no permit does not attract Clause (c) of Sub-section (2) of Section 96 of the Act which has been pressed into service to deny the statutory liability. At the highest, it is a case of breach of the condition of the permit which is not the same thing as breach of the purpose for which it was issued. The decision of the Bombay High Court in Raghunath Eknath Hivale Vs. Shardabai Karbhari Kale and Others etc., and those of some of the other High Courts which are referred to in para 10 of the said decision lend support to the above view. Even if such user amounts to the breach of statutory rules then also the defences allowed by Sub-section (2) are not attracted. The decision of the Gujarat High Court in Bomanji Rustomji Ginwala Vs. Ibrahim Vali Master and Others, supports this view. The contrary view expressed in New India Assurance Co. Ltd. v. Samundari Roadways Co. (P) Ltd. 1985 ACJ 239 (Punj & Har.) is, with respect, not correct.

For the foregoing reasons, none of the defences specified in Sub-section (2) of Section 96 of the Act is available on the facts and in the circumstances of the case and there being no substance in the appeal, it is summarily dismissed.