R.A.Sharma, J. - (1.) In view of the difference of opinion between the Hon'ble Judges, the Division Bench passed the following order referring three questions mentioned therein for being decided by a third Judge: Since we are divided in opinion, we refer the following points of difference for being decided by a third Judge in accordance with Chapter VII, Rule 3 of the Rules of the Court: (1) If a vehicle which is registered as a taxi meets an accident, whether the insurance company can disown its liability to compensate for the loss, if the driver driving the vehicle did not possess a driving licence which entitled him to drive a transport vehicle (taxi)? (2) Whether there is any embargo under the provisions of the Motor Vehicles Act, 1988, prohibiting driving of a transport vehicle (taxi) for private use by a person having a valid licence to drive a motor vehicle other than transport vehicle? (3) Whether on the facts and circumstances of the present case, the action of the insurance company in repudiating the claim of the petitioner was justified in law? Let the papers of this case be placed before the Hon'ble Chief Justice for appropriate orders, forthwith. The Hon'ble Chief Justice has nominated me for deciding those questions. I have heard the learned Counsel for the parties. Petitioner purchased a Maruti 1000 car under the State sponsored scheme and it was registered as a taxi. Petitioner submitted a proposal on 4.9.1992 before Oriental Insurance Co. Ltd. (hereinafter referred to as 'the company') for getting the said car insured as a taxi. The company, however, insured the car as a private car instead of a taxi. On 6.10.1992 petitioner's young brother, Parag Gupta, aged about 26 years was driving the said car when it was involved in a serious accident, resulting in the death of Parag Gupta and two of his friends. After the accident the car was declared as a total loss. The petitioner lodged a claim for Rs. 4,00,000/- against the company. The company repudiated the claim of the petitioner on the ground that Parag Gupta, who was driving the car, did not have a licence to drive a taxi. Hence this petition.
(2.) Chapter XI consisting of Sections 145 to 164 of the Motor Vehicles Act, 1988, (hereinafter referred to as 'the Act') deals with the insurance of the motor vehicles. Section 146 prohibits the use of a motor vehicle in a public place by any person except as a passenger, unless there is in force in relation to the use of the vehicle by that person, a policy of insurance complying with the requirements of the aforesaid Chapter. Section 147 has laid down the requirements of the insurance policy and limit of the liability of the insurance company. Relevant part of Sub-section (1) of Section 147 of the Act is extracted below: 147. Requirements of policies and limits of liability.-(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which( a) is issued by a person who is an authorised insurer; and (b) insures the person or classes of persons specified in the policy to the extent specified in Sub-section (2) (i) against any liability which may be incurred by him in respect of the death of 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 vehicle in a public place; (ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place.
(3.) Section 149 places an obligation on the insurer to satisfy judgment and award against the person insured in respect of third party risks. Sub-section (1) of Section 149 is as under: 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) 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. (Emphasis added) Under Sub-section (2) of Section 149 the insurer is entitled to defend the action initiated for recovery of the compensation on any of the following grounds: (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 (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 nondisclosure of a material fact or by a representation of fact which was false in some material particular.;