A. K. Sarkar, J. - (1.) These two appeals arise out of two suits and have been heard together. The suits had been filed against owners of motor cars for recovery of damages suffered by the plaintiffs as a result of the negligent driving of the cars. The owners of the cars were insured against third party risks and the insurers were subsequently added as defendants to the suits under the provisions of sub-s. (2) of S. 96 of the Motor vehicles Act, 1939. The terms of that sub-section will have to be set out later, but it may now, be stated that it provided that an insurer added as a party to an action under it was entitled to defend on the grounds enumerated in it.
(2.) On being added as defendants, the insurers filed written statements taking defended other than those mentioned in that sub-section. The plaintiffs contended that the written statements should be taken off the records as the insurers could defend the action only on the grounds mentioned in the sub-section and on no others. A question thereupon arose in the suits as to what defences were available to the insurers. In one of the suits it was held that the insurers could take only the defences specified in that sub-section and in the other suit the view taken was that the insurers were not confined to those defences. Appeals were preferred from these decisions to the High Court of Punjab. The High Court held that the insurers could defend the actions only on the grounds mentioned in the sub-section and on no others. Hence these appeals by the insurers.
(3.) The question is whether the defences available to an insurer added as a party under S. 96(2) are only those mentioned there. A few of the provisions of the Motor Vehicles Act have now to be referred to. Section 94 of the Act makes insurance against third party risk compulsory. Section 95 deals with the requirements of the policies of such insurance and the limits of the liability to be covered thereby. Sub-section (1) of this section provides: . . . . . a policy of insurance must be a policy which- (a) ********** (b) insures the person or classes of person specified in the policy to the extent specified in sub-s. (2) against any liability which may be incurred by him or them in respect of the death or bodily injury to any person caused by or arising out of the use of the vehicle in a public place." Sub-section (2) of S. 95 specifies the limits of the liability for which insurance has to be effected, and it is enough to say that it provides that in respect of private cars, which the vehicles with which these appeals are concerned were, the insurance has to be for the entire amount of the liability incurred. Then comes S:96 round which the arguments advanced in this case have turned and some of its provisions have to be set out. "Section 96. (1) If, after a certificate of insurance has been issued under sub-s. (4) of S. 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 cl.(b) of sub S. (1) of S. 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then notwithstanding e. g., 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 judgement-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-s. (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 any insurer to whom notice of the bringing of any such proceeding is so given shall be entitled to be made a party thereto and an 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 l05; 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 public service vehicle or a goods 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 (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 non-disclosure of a material fact or by a representation of fact which was false in some material particular. (2A) ********** ********** 3. Where a certificate of insurance has been issued under sub-s. (4) of S. 95 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in cl. (b) of sub-s. (2) shall, as respects such liabilities as are required to be covered by a policy under cl. (b) of sub-s. (1) of section 95, be of no effect: Provided that any sum paid by the insurer in or towards the discharge of any liability or any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person. 4. If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amounts for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person. 5. ********** 6. No insurer to whom the notice referred to in sub-s. (2) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgement as is referred to in sub.s. (t) otherwise than in the manner provided for in sub-s. (2)." ;