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Insurers cannot be excused from providing compensation on the basis of breach of policy: Karnataka High Court

Non-endorsement of the driving license of the driver who holds a valid license will not eliminate the liability of the insurer of providing compensation. The High Court of Karnataka, in the case of The Legal Executive of Bajaj Alliance General Insurance Company Ltd  v. Smt. Sharmila and others [MFA 3608/2017] benched by J. S Sujatha and J. Sachin Shankar Magadum shed light on whether the non-endorsement of driving license of a light motor vehicle would amount to breach of policy.

Bharath Kumar while travelling to Bengaluru in a Maruthi Wagon R, met with a road traffic accident owing to the actionable negligence of the driver of a Tractor and Trailer (offending vehicle), due to which he sustained fatal injuries and died on spot. The claimants being the wife and the children of the deceased instituted a petition under Section 166 of the Motor Vehicles Act seeking for compensation. The deceased having been the sole earning member of the family, his untimely death  had caused unbearable loss a to the family.

The appellants contended that the accident had occurred owing solely to the negligence of the deceased and further, since at the time of the accident neither deceased nor the driver of the tractor had valid driving license on them, the insurer was not liable to indemnify the owner of the offending vehicle. Also, that since the owner of the owner if the tractor breached the terms and conditions of the policy by transporting sand and hence, using it for commercial purpose, the insurer was not liable to pay compensation to the claimants. The Tribunal eventually awarded a total compensation of Rs.20,400/- with interest of 6% p.a. from the date of petition till its realization.  Aggrieved, the present appeal was filed by the insurer challenging the liability as well as the quantum of compensation. The counsel for the appellant argued that since the wife of the deceased is not an eye witness, her testimony is not to be relied upon. Also, that since the tractor was used for commercial purposes, a breach arose, and hence, the insurer had no liability and finally it was argued that the compensation awarded was exorbitant and unjust.

The HC, relying on Mukund Dewangan v. Oriental Insurance Company Limited [(2017) 14 SCC 663] held that “no endorsement was required to drive the transport vehicle, the offending vehicle in question being a light motor vehicle as per the definition clause of Section 2(21) of the Act”. In the same case it was also held that “non-possessing of an endorsement on the driving license to drive the transport vehicle by the driver holding the valid and effective driving license to drive the light motor vehicle would not be a breach of the policy conditions and the same would not disentitle the claimants in claiming vehicular accident compensation”. Further it was stated that the mere fact the tractor was used for carrying sand does not mean that it was for a commercial purpose and hence, the insurer cannot be exonerated from his liability on the basis of breach of policy conditions.  

Relying on the judgement of National Insurance Company Limited v. Pranay Sethi and others [(2017) 16 SCC 680] and New India Assurance Company Limited v. Somwati and others [Civil Appeal No. 3093 of 2020], the HC calculated the compensation and enhanced the quantum of the same.

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