Karnataka High Court
M/S. Advaith Motors Pvt. Ltd vs Sri. C. T. Chandru on 18 August, 2023
Bench: T G Gowda
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MFA No. 9590 of 2015
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 18TH DAY OF AUGUST, 2023
BEFORE
THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA
MFA NO. 9590 OF 2015 (MV-D)
BETWEEN:
M/S ADVAITH MOTORS PVT. LTD.
NO.77/1, VALAGEREHALLI, KENGERI
BANGALORE - 560 060 ... APPELLANT
(BY SRI.VIVEK HOLLA, ADV.)
AND:
1. SRI. C.T.CHANDRU
AGED ABOUT 59 YEARS
CHANNASANDRA VILLAGE
MADDUR TALUK, MANDYA DIST - 571 428
2. SMT. MADHUMATHI
W/O C.T.CHANDRU, AGED ABOUT 47 YEARS
CHANNASANDRA VILLAGE, MADDUR TALUK
MANDYA DIST - 571 428
3. SRI.ANAND RAJ, S/O AMUL LATEN
Digitally signed by AGED ABOUT 25 YEARS, NO.4
MALA K N 4TH MAIN, JJR NAGAR, RAJAPURAM
Location: HIGH COURT BANGALORE - 560 015
OF KARNATAKA
4. NATIONAL INSURANCE COMPANY
PRESTIGE SHOPPING ARCADE
D.O.NO.I & III FLOORS
RAMASWAMY CIRCLE
MYSORE CITY - 570 001 ... RESPONDENTS
(BY SMT.ARCHANA NAIR, ADV. FOR
SRI.AJITH ANAND SHETTY, ADV. FOR R1 & R2;
SRI.B.C.SEETHARAM RAO, ADV. FOR R4;
VIDE ORDER DATED 26.08.2019
NOTICE DISPENSED WITH)
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MFA No. 9590 of 2015
THIS MFA IS FILED UNDER SECTION 173(1) OF MV ACT
AGAINST THE JUDGMENT AND AWARD DATED 4.8.2015
PASSED IN MVC NO.324/2013 ON THE FILE OF THE SENIOR
CIVIL JUDGE, MACT, ADDITIONAL COURT OF SMALL CAUSES,
MYSURU, AWARDING A COMPENSATION OF RS.13,52,000/-
WITH INTEREST AT 6% P.A., FROM THE DATE OF PETITION
TILL ITS REALIZATION.
THIS MFA HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 28.07.2023 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT
DELIVERED THE FOLLOWING:
JUDGMENT
In this appeal, the owner of the vehicle has
challenged the judgment and award dated 04.08.2015
passed in M.V.C.No.324/2013 by the M.A.C.T., Mysuru
('the Tribunal' in short).
2. For the sake of convenience, the rank of the
parties shall be referred to as per their status before
the Tribunal.
3. The undisputed facts of the case are, on
19.11.2012 at about 12.45 p.m., the son of petitioners
by name C.C.Vachan, the deceased, while riding the
motor cycle bearing No.KA-11/Q-3060 met with an
accident near Bannur Ring Road junction at Mysuru hit
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MFA No. 9590 of 2015
by a Mercedez Benz car bearing No.KA-41/TC-NT-03
injuring him. The deceased was succumbed to death
at Cauvery Hospital, Mysuru. The petitioners being the
parents moved the Tribunal seeking compensation of
Rs.79,20,000/-. The claim was opposed by the
respondents. After taking the evidence of the parties,
the Tribunal allowed the claim petition in part awarding
compensation of Rs.13,52,000/- and directed the
owner of the vehicle to pay compensation. Aggrieved
by the fastening of liability, the owner has filed this
appeal on various grounds.
4. Heard the arguments of Sri.Vivek Holla,
learned counsel for the appellant, Smt.Archana Nair,
learned counsel for respondent Nos.1 and 2 and
Sri.B.C.Seetharama Rao, learned counsel for the
Insurance Company.
5. It is the contention of the learned counsel for
the insured that at the time of accident the deceased
was taking U-turn and dashed against the car, he was
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the root-cause for the accident. The spot sketch
prepared clearly supports the said aspect; the Tribunal
is wrong in attributing 80% contributory negligence
against the driver of the car; the Tribunal has
committed error in absolving the liability of the
Insurance Company on the ground that TMT
Endorsement No.41 specifies the distance of 80 kms
from the place of insurance and such defence is not
available to the Insurance Company under Section 149
of the Motor Vehicles Act, 1988. Along with the
Insurance Policy, the Insurance Company has not
supplied or attached the IMT Endorsement and the
Insurance Company is liable to pay the compensation.
It is also contended that the deceased was only a
student, the Tribunal has committed error in adding
50% future prospectus and also taking income of
Rs.10,000/- and assessed the higher compensation. To
support the said contention, learned counsel relied
upon the judgment of the Hon'ble Apex Court in
"United India Insurance Co. Ltd. -Vs- Lehru and
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MFA No. 9590 of 2015
others1", "National Insurance Co. Ltd.,
Chandigarh -Vs- Nicolletta Rohtagi and others2",
"British India General Insurance Co. Ltd. -Vs-
Captain Itbar Singh and others3" and judgment of
this Court in "The Divisional Manager, United India
Insurance Co. Ltd. -Vs- Smt. Jayamma and
others4" and "The General Manager, IFFCO Tokio
General Insurance Company Ltd. -Vs-
Vishwanath Reddy and Ors 5".
6. Per contra, learned counsel for the petitioners
contended that the deceased was a 2nd year MBA
student, he had a great prospectus of getting a
corporate job and earning huge income and the
Tribunal has taken income of Rs.10,000/- is not proper
and adding of 50% future prospectus is perfect with
respect to the age of the deceased on the date of
accident i.e., 24 years, the negligence is completely on
2003 (3) SCC 338
2002 (7) SCC 456
AIR 1959 SC 1331
ILR 2018 KAR 1849
MANU/KA/1323/2017
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the part of the driver of the car. The Tribunal has
committed error in attributing 20% negligence against
the deceased and sought for reversal of the same and
enhancement of the compensation.
7. Learned counsel for the Insurance Company
has contended that the car in question is a
demonstration car belonging to the insured, policy of
Insurance is restricted one as there is a limit for use of
the said vehicle from the premises of the Insured to an
extent of 80 kms. The policy of the Insurance is
subject to IMT endorsement Nos.24, 28, 41, 59 and
60. As per IMT endorsement No.41, the policy covers
the risk within the geographical area described in the
policy. Hence, there is a clear violation of IMT No.41
on the part of the driver of the vehicle and therefore,
the Insurance Company having a legal right to avoid
its liability to pay the compensation and the Tribunal
has correctly appreciated this aspect and asked the
insured to pay the compensation and he has supported
the impugned judgment.
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8. I have given my anxious consideration to the
arguments advanced on both sides and also perused
the materials on record.
9. There is no dispute as to the accident, cause
of the accident, death of the deceased on account of
the accidental injuries, the petitioners being the
parents entitled to claim the compensation. Both
Insurance Company as well as the owner of the car are
disputing the quantum of compensation assessed by
the Tribunal. The accident took place in the year
2012. The deceased was 2nd year MBA student at
Visvesvaraya Technological University, Mysuru. If he
had completed one year of his education, he had all
prospectus of getting a Management post in any
Multinational Company. Hence, the future prospectus
of the deceased cannot be ignored. The Tribunal has
assessed the income at Rs.10,000/- per month,
allowed 50% future prospectus. On the date of
accident, the deceased was aged 24 years, he was a
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student. Hence, notional income has to be considered.
In the year 2012, for a person with no proof of income,
the income is assessed at Rs.7,000/-. As discussed
above, since the deceased was an MBA student, he
was already a graduate. The Tribunal has taken income
at Rs.10,000/- compared to notional income of a coolie
person of Rs.7,000/-, a sum of Rs.10,000/- taken by
the Tribunal is justifiable. By applying the principles of
National Insurance Co.Ltd. -vs- Pranay Sethi
and Others6, for a person with no proof of income,
percentage of future prospectus to be added at 40%
for a person aged less than 40 years. Hence, the
Tribunal has committed error in adding 50% of future
prospectus. Accordingly, the compensation has to be
calculated. The notional income of the deceased if
taken at Rs.10,000/-, Rs.4,000/- is added as future
prospectus of 40%, his probable income comes to
Rs.14,000/-. Since the deceased was a bachelor, 50%
has to be deducted towards personal expenses. If so,
(2017) 16 SCC 680
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Rs.7,000/- x 12 x 18 comes to Rs.15,12,000/- towards
loss of dependency. The deceased left behind his
parents. Hence, under conventional heads Rs.40,000/-
towards loss of love and affection and Rs.15,000/-
each towards loss of estate and funeral expenses is
added. Total compensation comes to Rs.16,22,000/-
as against Rs.16,90,000/- assessed by the Tribunal.
Having regard to the facts and circumstances of the
case, I do not found any error in the order of the
Tribunal in determining the compensation and I do not
found any reason to interfere in the order of the
Tribunal.
10. The issue is regarding the liability on the part
of the Insurance Company. The Tribunal while
considering the evidence on record, recorded its
finding that the driver of the car has contributed 80%
and the deceased at 20%. Such finding is based on
the material evidence placed before the Tribunal and I
do not found any reason to interfere with the finding
recorded by the Tribunal.
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11. There is no dispute that the car in question is
a demonstration car owned by the insured who is the
authorized dealer of the said car. The said car has
been covered with the policy of insurance as per Ex.R1
that the policy is subject to IMT Endorsement No.41.
Endorsement No.41 reads as follows:
"IMT.41 Motor Trade Policy - Class 'F' - Road
Risk only
It is hereby declared and agreed that
notwithstanding anything contained herein to the
contrary that in respect of any new vehicle and/or
chassis bearing a Trade Certificate Number specified
in the Schedule of the policy, the Geographical Area
for the purpose of this Policy shall be as defined
hereunder and not as stated in the Schedule hereto.
Geographical Area
Under Section II - (i) ---- INDIA
Under all other Sections - Within a radius of ......*
kilometers from the insured's address as stated in
the Schedule hereto.
Subject otherwise to the terms conditions limitations
and exceptions of this Policy.
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*to insert '80' or '120' as opted for by insured and
premium paid accordingly."
12. Now, as per the said Endorsement, the
distance provided for geographical area is either 80 or
120. In the policy, the distance from the premises is
mentioned as 80. Relying on this, it is contended by
the learned counsel for the Insurance Company that
the address of the insured is Valagerehalli, Kengeri
Hobli, Opposite R.V. College, Mysuru Road, Bengaluru-
560060. The accident took place at Mysuru which is
140 kms away from the Bengaluru City and thereby
there is a violation of the policy conditions. On perusal
of the findings recorded by the Tribunal, the Tribunal
has also recorded the same. As seen from the records,
the distance from the location of the insured to the
place of accident is around 120 kms and the car at the
time of accident exceeded the limit of 80 kms from its
premises to an extent of 40 kms. Whether this
exceeding limit of 40 kms amounts to breach of
violation of the conditions of policy or not is the
question before this Court.
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13. In this regard, it is relevant to read Section
149(2) of the Motor Vehicles Act, 1988. Section
149(2) of the Motor Vehicles Act reads as follows:
"149. Duty of insurers to satisfy judgments and
awards against persons insured in respect of third-
party risks. (1) If, after a certificate of insurance has
been issued under sub-section (3) of Section 147 in
favour of the person by whom a policy has been
effected, judgment or award in respect of any such
liability as is required to be covered by a policy under
clause (b) of sub-section (1) of section 147 (being a
liability covered by the terms of the policy) or under
the provisions of section 163-A 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.
(2) No sum shall be payable by an insurer under
sub-section (1) in respect of any judgment or award
unless, before the commencement of the proceedings
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in which the judgment of award is given the insurer
had notice through the Court or, as the case may be,
the Claims Tribunal of the bringing of the
proceedings, or in respect of such judgment or award
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 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 a motor cycle; or
(ii) a condition excluding driving by a named
person or persons or by any person who is not duly
licensed, or by any person who has been
disqualified for holding or obtaining a driving
licence during the period of disqualification; or
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(iii) a condition excluding liability for injury
caused or contributed to by conditions of war, civil
war, riot or civil commotion; or
(b) 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.
14. The main contention of the owner of the
vehicle is that there is no defence available under
Section 149(2) of the Motor Vehicles Act to the
Insurance Company. Since the IMT Endorsement was
not attached with the Ex.R1/Policy, the limitation of 80
kms is not made known to the owner and therefore,
there is no breach of terms of the policy.
15. In this regard, the Hon'ble Apex Court in
United India Insurance Co. Ltd. -Vs- Lehru and
others (supra) held at paragraph No.18 as follows:
"18. Now let us consider Section 149(2). Reliance
has been placed on Section 149(2)(a)(ii). As seen,
in order to avoid liability under this provision it
must be shown that there is a ''breach". As held in
Skandia2 and Sohan Lal Passi3 cases the breach
must be on part of the insured. We are in full
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agreement with that. To hold otherwise would lead
to absurd results. Just to take an example, suppose
a vehicle is stolen. Whilst it is being driven by the
thief there is an accident. The thief is caught and it
is ascertained that he had not license. Can the
Insurance Company disown liability? The answer
has to be an emphatic "No". To hold otherwise
would be to negate the very purpose of compulsory
insurance. The injured or relatives of person killed
in the accident may find that the decree obtained
by them is only a paper decree as the owner is a
man of straw. The owner himself would be an
innocent sufferer. It is for this reason that the
Legislature, in its wisdom has made insurance, at
least third-party insurance, compulsory. The aim
and purpose being that an insurance Company
would be available to pay. The business of the
Company is insurance. In all businesses there is an
element of risk. All persons carrying on business
must take risks associated with that business. Thus
it is equitable that the business which is run for
making profits also bears the risk associated with
it. At the same time innocent parties must not be
made to suffer or loss. These provisions meet these
requirements. We are thus in agreement with what
is laid down in aforementioned cases viz. that in
order to avoid liability it is not sufficient to show
that the person driving at the time of accident was
not duly licensed. The Insurance Company must
establish that the breach was on the part of the
insured."
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In Nicolletta Rohtagi's case (supra) at
paragraph No.31 held as follows:
" In any case where an application for permission is
erroneously rejected the insurer can challenge only
that part of the order while filing appeal on grounds
specified in sub-section (2) of Section 149 of the
1988 Act. But such application for permission has
to be bona fide and filed at the stage when the
insured is required to lead his evidence. So far as
obtaining compensation by fraud by the claimant is
concerned, it is no longer res integra that fraud
vitiates the entire proceeding and in such cases it
is open to an insurer to apply to the Tribunal for
rectification of award."
In Smt. Jayamma's case (supra), this Court at
para No.15 and 16 held as follows:
"15. Be that as it may. Even as could be seen from
the written statement filed by the insurer, at
paragraph 9, he has specifically contended that
permit given to the autorickshaw bearing
registration No.KA.27/A.1891 is to ply within 10
kms from the city limits of Ranebennur. But the
owner of autorickshaw had taken away the said
autorickshaw 22 kms away from Ranebennur limits.
There is difference between two aspect. First one,
there is no permit at all to ply the vehicle and the
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second one is, there is permit but has gone beyond
the limit. In the first one, it is a fundamental
breach and on proof, the insurer can avoid the
liability. With respect to the second, City permit to
a particular distance is fixed because large number
of such vehicles are operated in the State to the
detriment of public interest. Another aspect is that
the State has to see that the ownership and control
of the material resources are so distributed as best
serve the common good and there should not be
concentration. In that light, a breach only invites
criminal penalty, as such, it is not so fundamental
to say there is breach of policy condition. It is well
established principle of law that the insurer has to
establish that the breach of policy is so
fundamental that it ended the contract which has
been entered into between the insurer and the
insured. In other words violation must be of such a
nature that it is the primary cause of the accident
and not otherwise. With this object, the Legislature
has spelled out grounds on which the Insurance
Company can avoid its liability. The defence
provided to the Insurance Company is a statutory
right. We cannot import or read any other grounds
than what are spelled out in sub-Section(2) of
Section 149 of the Act.
16. From the above said facts and circumstances,
plying the autorickshaw a few kilometers beyond
the permit limits doesn't amount to fundamental
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breach of the terms of the policy. The said alleged
violation finds no place in Section 149(2) of the
Act. Therefore, the defence of the Counsel that the
vehicle in question had been driven beyond the
territorial limits of Ranebennur amounts to violation
of the permit condition, is not acceptable and the
same is hereby rejected."
16. In view of the settled principles so referred
supra, particularly the judgment of this Court that the
breach of violation of conditions of the policy in respect
of permit is not a fundamental breach and such
violation finds no place in Section 149(2) of the Motor
Vehicles Act.
17. The Hon'ble Apex Court in Lehru's case
(supra) held that the Insurance Company cannot
avoid its liability to indemnify the insured except on
limited grounds set out in Section 149(2) of the Motor
Vehicles Act.
18. From the above, it is thus clear that though
Ex.R1/Policy indicates the distance from the premises
of the owner is 80, the accident took place 40 kms
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exceeding the said limit is not a fundamental breach
and such breach is not available in grounds set out in
sub-section (2) of Section 149 of the Motor Vehicles
Act. There is a substance in the contention of the
owner of the car that though the accident took place at
Mysuru, it is not a fundamental breach of terms of the
policy under which the Insurance Company can avoid
its liability to pay the compensation. Hence, the
appeal merits consideration and the contention of the
Insurance Company cannot be supported with.
19. I have carefully perused the impugned
judgment. The Trial Court is right in assessing the
compensation, but it has committed an error in solely
relying on IMT Endorsement No.41 that the accident
took place outside the distance of 80 kms of
geographical area mentioned in Ex.R1. The Tribunal
stated that such violation is not within the purview of
Section 149(2) of the Motor Vehicles Act, Insurance
Company can avoid its liability as there is a
fundamental breach of violation of policy conditions.
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To that effect the impugned judgment calls for the
interference. In result, I pass the following:
ORDER
i) The appeal is allowed.
ii) The impugned judgment is modified. Both
insurer and insured are jointly liable to pay the
compensation and the Insurance Company is
directed to indemnify the insured.
iii) The Insurance Company is directed to deposit
80% of the total compensation with interest of
6% p.a. within eight weeks from the date of
receipt of certified copy of this judgment.
iv) The amount in deposit, if any, shall be
transmitted to the Tribunal along with records
forthwith.
SD/-
JUDGE
PA
