Full Judgment Text
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PETITIONER:
SKANDIA INSURANCE CO. LTD.
Vs.
RESPONDENT:
KOKILABEN CHANDRAVADAN & ORS.
DATE OF JUDGMENT01/04/1987
BENCH:
THAKKAR, M.P. (J)
BENCH:
THAKKAR, M.P. (J)
RAY, B.C. (J)
CITATION:
1987 AIR 1184 1987 SCR (2) 752
1987 SCC (2) 654 JT 1987 (2) 43
1987 SCALE (1)648
CITATOR INFO :
R 1991 SC1769 (12)
ACT:
Motor Vehicles Act, 1939--Ss. 94, 95 and 96--Victim of
motor vehicle accident--Compensation from insurance
company--Insurance against third party risk--Immunity of
Insurance Company--Extent of--In case of breach of condi-
tions of Insurance policy.
Statutory Interpretation--Intention of Legislature
Ascertainment of--To probe the motive and philosophy of the
relevant statutory provisions.
HEADNOTE:
The driver of a truck handed over the control of his
vehicle to the cleaner while its engine was running and the
ignition key was in the ignition lock. In the absence of the
driver, who had gone for bringing snacks the cleaner inter-
fered with the vehicle. which resulted in an accident.
The Tribunal as well as the High Court held that this
being the immediate cause of the accident, the owner of the
truck was vicariously liable. The High Court further held
that since the owner never gave permission to his cleaner to
drive, he could not he held guilty of the breach of the
contractual condition embodied in the policy of insurance
and, therefore, the insurer cannot plead any exception on
the ground that the owner had committed breach of the speci-
fied condition.
In the appeal to this Court, on behalf of the
appellant-Insurance Company it was contended: (i) that in
view of the exclusion clause in the insurance policy the
Insurance Company would not be liable if it was established
that the accident occurred when an unlicenced person was at
the wheels; (ii) that the exclusion clause is strictly in
accordance with the statutorily permissible exclusion em-
bodied in s. 96(2)(b)(ii) of the Motor Vehicles Act, 1939
and (iii) that under the circumstances the appellant-Company
is not under a legal obligation to satisfy the judgments
against the insured.
Dismissing the Appeal,
HELD: 1. The exclusion clause in the policy of insurance
does not exonerate the Insurer. [766B]
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753
Kilari Mammi and Others. v. Barium Chemicals Ltd. &
Ors., A.I.R. 1979 (Andhra Pradesh) 75, approved.
Kirpa Natha Chakravarthy and others v. Rup Chand Luna-
wat, A.I.R. 1955 Assam p. 157; Shankar Rao v. M/s Babulal
Fouzdar and another, A.I.R. 1980 (Madhya Pradesh) 9. 154;
Orissa State Commercial Transport Corporation, Cuttack v.
Dhumali Bewa & Ors. etc., A.I.R. 1982 (Orissa) 70 and Dwarka
Prasad Jhunjhunwala and another v. Sushila Devi & Ors.,
A.I.R. 1983 Patna 246, overruled.
2. The vicarious liability of the owner of the vehicle
for damages arising out of the accident cannot be disputed
having regard to the general principles of law also having
regard to the violation of the obligation imposed by s. 84
of the Act which provides that no person driving or in
charge of a motor vehicle shall cause or allow the vehicle
to remain stationary in any public place, unless there is in
the driver’s seat a person duly licensed to drive the vehi-
cle or unless the mechanism has been stopped and a brake or
brakes applied or such other measures taken as to ensure
that the vehicle cannot accidentally be put in motion in the
absence of the driver. [764B-C]
3. In order to divine the intention of the legislature
in the course of interpretation of the relevant provisions
there can scarcely be a better test than that of probing
into the motive and philosophy of the relevant provisions
keeping in mind the goals to be achieved by enacting the
same. [761G]
4. Ordinarily it is not the concern of the legislature
whether the owner of the vehicle insures his vehicle or not.
If the vehicle is not insured any legal liability arising on
account of third party risk will have to be borne by the
owner of the vehicle. Section 94 has been enacted to protect
the members of the community travelling in vehicles or using
the roads from the risk attendant upon the user of motor
vehicles on the roads. The law may provide for compensation
to victims of the accidents who sustain injuries in the
course of an automobile accident or compensation to the
dependents of the victims in the case of a fatal accident.
However, such protection would remain a protection on paper
unless there is a guarantee that the compensation awarded by
the Courts would be recoverable from the persons held liable
for the consequences of the accidents. The legislature has,
therefore, made it obligatory that no motor vehicle shall be
used unless a third party insurance is in force. To use the
vehicle without the requisite third party insurance being in
force is a penal offence under s. 94 of the Act. In
754
order to make the protection real, the legislature has also
provided that the judgment obtained shall not be defeated by
the incorporation of exclusion clauses other than those
authorised by s. 96 and it will be the obligation of the
Insurance Company to satisfy the judgment obtained against
the persons insured against third party risks. [761G-H;
762A-B]
5. Section 96(2)(b)(ii) extends immunity to the Insur-
ance Company if a breach is committed of the condition
excluding driving by a named person or persons or by any
person who is not fully licensed, or by any person who has
been disqualified for holding or obtaining a driving licence
during the period of disqualification. Therefore, the insur-
er will have to establish that the insured is quilty of an
infringement or violation of a promise that a person who is
duly licensed will have to be in charge of the vehicle. The
very concept of infringement of violation of the promise
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that the expression ’breach’ carries within itself induces
an inference that the violation or infringement on the part
of the promiser must be a wilful infringement or violation.
If the insured is not at all at fault and has not done
anything he should not have done or is not amiss in any
respect how can it be conscientiously posited that he has
committed a breach? It is only when the insured himself
places the vehicle in charge of a person who does not hold a
driving licence, that it can be said that he is ’guilty’ of
the breach of the promise that the vehicle will be driven by
a licensed driver. It must be established by the Insurance
Company that the breach was on the part of the insured and
that it was the insured who was guilty of violating the
promise or infringement of the contract. Unless the insured
is at fault and is guilty of a breach the insurer cannot
escape from the obligation to indemnify the insured and
successfully contend that he is exonerated having regard to
the fact that the promisor (the insured) committed a breach
of his promise. Not when some mishap occurs by some mis-
chance. When the insured has done everything within his
power inasmuch as he has engaged a licensed driver, and has
placed the vehicle in charge of a licensed driver, with the
express or implied mandate to drive himself it cannot be
said that the insurer is guilty of any breach. And it is
only in case of a breach or a violation of the promise on
the part of the insured that the insured can hide under the
umbrella of the exclusion clause. [763B-G]
6. The question is as to whether the promise made by the
insured is an absolute promise or whether he is exculpated
on the basis of some legal doctrine. In the present case
even if the promise were to be treated as an absolute prom-
ise the grounds for exculpation can be found from s. 84. In
view of this provision apart from the implied mandate to the
licensed driver not to place a non-licensed person in charge
of the
755
vehicle, there is also a statutory obligation on the said
person not to leave the vehicle unattended and not to place
it in charge of an unlicensed driver. What is prohibited by
law must be treated as mandate to the employee and should be
considered sufficient in the eye of law for excusing non-
compliance with the conditions. It cannot therefore in any
case be considered as a breach on the part of the insured.
[763G 764A; C-El
7. The statutory provisions defining the conditions of
exemption under s. 96(2)(b)(ii) and not the contract of
insurance must be interpreted in the spirit in which the
same have been enacted, accompanied by an anxiety to ensure
that the protection is not nullified by the backward looking
interpretation which serves to defeat the provision rather
than to fulfil its life-aim. To do otherwise would amount to
nullifying the benevolent provision. [764F-G]
8. When the option is between opting for a view which
will relieve the distress and misery of the victims of
accidents or their dependents on the one hand and the equal-
ly plausible view which will reduce the profitability of the
insurer in regard to the occupational hazard undertaken by
him by way of business activity, there is hardly any choice.
The Court cannot but opt for the former view. [765B-C]
9. The exclusion clause has to be ’read down’ in order
that it is not at par with the ’main purpose’ of the provi-
sions enacted for the protection of victims of accidents so
that the promisor is exculpated when he does everything in
his power to keep the promise. [765C-D]
Collins English Dictionary and Carter’s Breach of Con-
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tract (1984 Edn.) Paras 239 and 251, relied upon.
JUDGMENT:
CIVIL APFELLATE JURISDICTION: Civil Appeal No. 1306 (N)
of 1973.
From the Judgment and Order dated 25.10.1971 of the
Gujarat High Court in F.A. No. 320 of 1967.
G. Ramaswamy, Additional Solicitor General, H.K. Puri
and S.C. Dhanda for the Appellant.
M.V. Goswami for the Respondents.
The Judgment of the Court was delivered by
756
THAKKAR, J. While in some States1 a widow of a victim of
a motor vehicle accident can recover the amount of compensa-
tion awarded to her from the Insurance Company, in a pre-
cisely similar fact-situation she would be unable to do so,
in other States2, conflicting views having been taken by the
respective High Courts. The unaesthetic wrinkles from the
face of law require to be removed by settling the law so
that the same law does not operate on citizens differently
depending on the situs of the accident. The question is
whether the insurer is entitled to claim immunity from a
decree obtained by the dependents of the victim of a fatal
accident on the ground that the insurance policy provided "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," and that
such exclusion was permissible in the context of Section
96(2)(b)(ii)3 for claiming immunity against the obligation
to satisfy the judgments against the insured in respect of
third party risks.
The facts are not in dispute. The Claims Tribunal as
also the High Court have concurred with the findings which
are recorded in the following passage:-
"The accident in question took place on Novem-
ber 14, 1964. The truck had come from Barejadi
and had been unloaded at Baroda. The driver
had gone for bringing snacks from the opposite
shop leaving the engine running. The ignition
key was in the ignition lock and not in the
cabin in the truck as alleged by the driver.
The driver had handed over control of the
truck to the cleaner. On these facts the
driver having been grossly negligent in leav-
ing
1. Andhra Pradesh, Gujarat.
Assam, Madhya Pradesh, Orissa.
3. "96. Duty of insurers to satisfy judgments against per-
sons insured in respect of third party risks--(1) If, after
a certificate of insurance has been issued under sub-section
(4) of Section 95 in favour of the person by whom a policy
has been effected, judgments in respect of any such liabili-
ty is required to be covered by a policy under clause (b) of
sub-section (1) of Section 95 (being, a liability covered by
the terms of the policy) is obtained against any person
insured by the policy, then, nothwithstanding 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 enti-
tled 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 ................
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757
such a truck with its running engine in the
control of the cleaner, this being the immedi-
ate cause of the accident, the owner of the
car viz. the insured was held vicariously
liable along with the driver and the cleaner."
The view taken by the High Court has been summed up as
under:
"In the present case there is not an allega-
tion even that the insurer had at any time
committed a breach of this condition. The
insured has never permitted the cleaner to
drive on the fatal occasion. The insured has
permitted only the driver who is admittedly
the licenced driver. It is the driver’s negli-
gence in leaving the vehicle with its engine
running with the ignition key in the ignition
lock that resulted in this accident. But for
this gross negligence of the driver, the
cleaner would not have been able to interfere
with this vehicle. Once a finding is that the
driver in the course of the employment or the
master’s agent in the course of that agency,
he negligently left the vehicle with the
cleaner, the vicarious liability would immedi-
ately be fastened to the owner of the
truck ......... Even if vicarious liability
arises because of this principle of social
justice and not because the owner committed
any breach of the policy condition. The owner
in the present case never gave permission to
this cleaner to drive and, therefore, the
f.n. 3 contd.
2. No sum shall be payable by an insurer under sub-section
(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 bring-
ing of the proceedings, or in respect of any judgment so
long as execution is stayed thereon pending an appeal; and
an insurer to whom notice of the bringing of any such pro-
ceeding is so given shall be entitled to be made a part
thereto and to defend the action on any of the following
grounds, namely:-
(a). xxx
(b) that there has been a breach of a specified condition
of the policy, being one of the following conditions
namely:-
(i) xxxx
(a) to (d) x x x x
(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
XXXX"
758
owner even though he had become liable by
reason of his vicarious liability he could not
be held guilty of the breach of the contractu-
al condition embodied in the policy of insur-
ance. Therefore, the insurer cannot plead any
exemption on the ground that the owner had
committed breach of the specified
condition .... "
It has been contended on behalf of the Insurance Company
that since admittedly there was an exclusion clause, the
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Insurance Company would not be liable in case at the point
of time when the accident occurred the person who had been
driving the vehicle was not a duly licensed person to drive
the vehicle. It was immaterial that the insured had engaged
a licensed driver and had entrusted the vehicle for being
driven to the licensed driver. Once it was established that
the accident occurred when an unlicensed person was at the
wheels the Insurance Company would be exonerated from the
liability. The validity of this argument advanced in order
to assail the view taken by the High Court has to be tested
in the light of the provisions contained in Sections 96(1)
and 96(2)(b)(ii) of the Motor Vehicles Act (Act).
But before doing so a brief survey of the decisions of
the High Courts may be usefully made. Reliance is placed on
behalf of the appellant on Kripa Natha Chakravanhy and
others v. Rup Chand Lunawar, A.I.R. 1955 Assam p. 157. The
view has been taken therein .that while the master
is .undoubtedly liable for the wrongful conduct or negli-
gence of his servant where the act or conduct or negligence
occurs in the course of the master’s employment or in fur-
therance of his interest notwithstanding the fact that the
servant may have been prohibited from doing such an act. The
High Court has however proceeded to absolve the Insurance
Company from the liability in the light of Section 96(2) of
the Act. The High Court in doing so has not examined or
analyzed the provisions of Section 96(2) and has taken for
granted that once it is established that the vehicle was
being driven by an unlicensed person the Insurance Company
stood exonerated. The decision is therefore of little sig-
nificance for testing the validity or otherwise of the view
taken in the judgment under appeal.
The appellant has also relied on Shankar Rao v. M/s
Babulal Fouzdar and another, A.I.R. 1980 (Madhya Pradesh) p.
154. wherein the High Court has exonerated the Insurance
Company on the following reasoning:-
"According to one of the terms of the policy
of insurance
759
the insurer’s liability is subject to the
condition that person driving the vehicle
holds a licence to drive the vehicle or has
held and is not disqualified from holding or
obtaining such a licence and provided he is in
the employment of insured and is driving on
his order or with his permission. Unless the
person driving the vehicle falls in that
category, the insurer is not liable under the
policy and is, therefore, exempted from indem-
nifying the insured. In the present case,
apart from the question whether Hari Prasad
held a driving licence or not, he was neither
in the employment of the insured nor was he
driving the bus at the time of the accident on
the order or with the permission of the in-
sured. The insurer, therefore, is exempt from
any liability under the terms of the policy
and there is no infirmity even in this conclu-
sion reached by the Tribunal."
It has to be noticed that the conclusion of the High
Court is backed only by an assertion and not by reasoning.
It is therefore of little assistance in resolving the issue.
So also the appellant has placed reliance on Orissa
State Commercial Transport Corporation, Cuttack v. Dhumali
Bewa & Ors. etc., A.I.R. 1982 (Orissa) 70 wherein the High
Court came to the conclusion that the insurer was not li-
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able. The entire reasoning is contained in the following
passage which does not threw any light in regard to the
basis of the reasoning or the interpretation of Section
96(2)(b)(ii):-
"The insurer who is opp. party no.2 in the
common written statement denied the averments
made in the petitions. It contended that it is
not liable to compensate the appellant as the
vehicle was driven by S. Appa Rao who had no
driving licence. Further the accident took
place near Jetty no. 1 which is not a public
place. For the aforesaid reasons, it is con-
tended that opp. party no. 2 is not liable to
indemnify opp. party no. 1."
On behalf of the respondents support is sought from
Kilari Mammi and others v. Barium Chemicals Ltd. & Ors.,
A.I.R. 1979 (Andhra Pradesh) 75 decided by the Andhra Pra-
desh High Court which has taken the same view as has been
taken by the Gujarat High Court in the judgment under ap-
peal. Says the High Court:-
"If the first respondent had authorised only a
licensed
760
driver to drive the vehicle, then the defence
under section 96(2) could be rightly invoked
by the 4th respondent. But this is a case
where due to the negligence of the authorised
driver, the third respondent, a third person,
drove the vehicle and, therefore, I do not
think the decision relied upon by the learned
counsel is of any reliance to the facts of
this case."
This decision is also exposed to the same criticism. It is
buttressed by ’ipse-dixit’ rather than rationation.
The respondents have also placed reliance on Dwarka
Prasad Jhunjhunwala and another v. Sushila Devi & Ors.,
A.I.R. 1983 Patna 246. It is no doubt true that the High
Court has upheld the claim of the insured to be reimbursed
by the Insurance Company but as is evident from paragraph 9
of the judgment, which is reproduced below things have been
taken for granted:
"From the above discussions it is clear and
was not disputed that the liability of appel-
lant no. 1 for the negligent act of his driver
is there. If appellant no. 1 being the owner
of the car is liable, then I do not see why if
the insurance company cannot be fastened with
the liability. The appellant had taken an
insurance policy to cover the risk against
third party. Clause (b) of Section 95(1)
ensures the person against the liability
incurred by him in respect of the death or
bodily injury to any person caused by or
arising out of the use of the vehicle in
public place. In view of this cover the appel-
lant no. 1 appears to me to be certainly
entitled to shift the burden of the compensa-
tion awarded against him on the Insurance
company which, in this case the car being a
private one, is unlimited. I would, therefore,
accept the argument of Mr. S.C. Ghose that on
the facts and in the circumstances discussed
above the liability of appellant no. 1 should
be shifted from him to the National Insurance
Co. Ltd., respondent no. 7."
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The question therefore deserves to be examined afresh on
its own merits on principle. Now, the proposition is incon-
trovertible that so far as the owner of the vehicle is
concerned, his vicarious liability for damages arising out
of the accident cannot be disputed having regard to the
general principles of law as also having regard to the
violation of the obligation imposed by Section 84 of the Act
which provides that no person driving or in charge of a
motor vehicle shall cause or allow the vehicle to remain
stationary in any public place,
761
unless there is in the deiver’s seat a person duly licensed
to drive the vehicle or unless the mechanism has been
stopped and a brake or brakes applied or such other measures
taken as to ensure that the vehicle cannot accidentally be
put in motion in the absence of the driver. However, in the
present case the appellant contends that the exclusion
clause is strictly in accordance with the statutorily per-
missible exclusion embodied in Section 96(2)(b)(ii) and that
under the circumstances the appellant Insurance Company is
not under a legal obligation to satisfy the judgment pro-
cured by the respondents.
The defence built on the exclusion clause cannot succeed
for three reasons, viz:-
1. On a true interpretation of the
relevant clause which interpretation is at
peace with the conscience of Section 96, the
condition excluding driving by a person not
duly licensed is not absolute and the promisor
is absolved once it is shown that he has done
everything in his power to keep, honour, and
fulfil the promise and he himself is not
guilty of a deliberate breach.
2. Even if it is treated as an absolute
promise, there is substantial compliance
therewith upon an express or implied mandate
being given to the licensed driver not to
allow the vehicle to be left unattended so
that it happens to be driven by an unlicensed
driver.
3. The exclusion clause has to be ’read
down’ in order that it is not at war with the
’main purpose’ of the provisions enacted for
the protection of victims of accidents so that
the promisor is exculpated when he does every-
thing in his power to keep the promise.
In order to divine the intention of the legislature in
the course of interpretation of the relevant provisions
there can scarcely be a better test than that of probing
into the motive and philosophy of the relevant provisions
keeping in mind the goals to be achieved by enacting the
same. Ordinarily it is not the concern of the legislature
whether the owner of the vehicle insures his vehicle or not.
If the vehicle is not insured any legal liability arising on
account of third party risk will have to be borne by the
owner of the vehicle. Why then has the legislature insisted
on a person using a motor vehicle in a public place to
insure against third party risk by enacting Section 94.
Surely the
762
obligation has not been imposed in order to promote the
business of the insurers engaged in the business of automo-
bile insurance. The provision has been inserted in order to
protect the members of the Community travelling in vehicles
or using the roads from the risk attendant upon the user of
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motor vehicles on the roads. The law may provide for compen-
sation to victims of the accidents who sustain injuries in
the course of an automobile accident or compensation to the
dependents of the victims in the case of a fatal accident.
However, such protection would remain a protection on paper
unless there is a guarantee that the compensation awarded by
the Courts would be recoverable from the persons held liable
for the consequences of the accident. A Court can only pass
an award or a decree. It cannot ensure that such an award or
decree results in the amount awarded being actually recov-
ered, from the person held liable who may not have the
resources. The exercise undertaken by the law Courts would
then be an exercise in futility. And the outcome of the
legal proceedings which by the very nature of things involve
the time cost and money cost invested from the scarce re-
sources of the Community would make a mockery of the injured
victim, or the dependents of the deceased victim of the
accident, who themselves are obliged to incur not inconsid-
erable expenditure of time, money and energy in litigation.
To overcome this ugly situation the legislature has made it
obligatory that no motor vehicle shall be used unless a
third party insurance is in force. To use the vehicle with-
out the requisite third party insurance being in force is a
penal offence.1 The legislature was also faced with another
problem. The insurance policy might provide for liability
walled in by conditions which may be specified in the con-
tract of policy. In order to make the protection real, the
legislature has also provided that the judgment obtained
shall not be defeated by the incorporation of exclusion
clauses other than those authorised by Section 96 and by
providing that except and save to the extent permitted by
Section 96 it will be the obligation of the Insurance Compa-
ny to satisfy the judgment obtained against the persons
insured against third party risks. (vide Section 96). In
other words, the legislature has insisted and made it incum-
bent on the user of a motor vehicle to be armed with an
insurance policy coveting third party risks which is in
conformity with the provisions enacted by the legislature.
It is so provided in order to ensure that the injured vic-
tims of automobile accidents or the dependents of the vic-
tims of fatal accidents are really compensated in terms of
money and not in terms of promise. Such a benign provision
enacted by the legislature having regard to the fact that in
the modern age the use of motor vehicles notwithstanding the
attendant hazards, has be-
1. Section 94 of the Motor Vehicles Act.
763
come an inescapable fact of life, has to be interpreted in a
meaningful manner which serves rather than defeats the
purpose of the legislation. The provision has therefore to
be interpreted in the twilight of the aforesaid perspective.
Section 96(2)(b)(ii) extends immunity to the Insurance
Company if a breach is committed of the condition excluding
driving by a named person or persons or by any person who is
not fully licensed, or by any person who has been disquali-
fied for holding or obtaining a driving licence during the
period of disqualification. The expression ’breach’ is of
great significance. The dictionary meaning of ’breach’ is
’infringement or violation of a promise or obligation’.1 It
is therefore abundantly clear that the insurer will have to
establish that the insured is guilty of an infringement or
violation of a promise that a person who is duly licensed
will have to be in charge of the vehicle. The very concept
of infringement or violation of the promise that the expres-
sion ’breach’ carries within itself induces an inference
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that the violation or infringement on the part of the promi-
sor must be a wilful infringement or violation. If the
insured is not at all at fault and has not done anything he
should not have done or is not amiss in any respect how can
it be conscientiously posited that he has committed a
breach? It is only when the insured himself places the
vehicle in charge of a person who does not hold a driving
licence, that it can be said that he is ’guilty’ of the
breach of the promise that the vehicle will be driven by a
licensed driver. It must be established by the Insurance
Company that the breach was on the part of the insured and
that it was the insured who was guilty of violating the
promise or infringement of the contract. Unless the insured
is at fault and is guilty of a breach the insurer cannot
escape from the obligation to indemnify the insured and
successfully contend that he is exonerated having regard to
the fact that the promisor (the insured) committed a breach
of his promise. Not when some mishap occurs by some mis-
chance. When the insured has done everything within his
power inasmuch as he has engaged a licensed driver and has
placed the vehicle in charge of a licensed driver with the
express or implied mandate to drive himself it cannot be
said that the insured is guilty of any breach. And it is
only in case of a breach or a violation of the promise on
the part of the insured that the insurer can hide under the
umbrella of the exclusion clause. In a way the question is
as to whether the promise made by the insured is an absolute
promise or whether he is exculpated on the basis of some
legal doctrine. The discussion made in paragraph 239 of
Breach of Contract by Carter (1984 Edition) under the head
Proof of Breach,
1. See Collins English Dictionary.
764
gives an inkling of this dimension of the matter1 In the
present case even if the promise were to be treated as an
absolute promise the grounds for exculpation can be found
from Section 84 of the Act which reads under:-
"84. Stationary vehicles--No person driving or in charge of
a motor vehicle shall cause or allow the vehicle to remain
stationary in any public place, unless there is in the
driver’s seat a person duly licensed to drive the vehicle or
unless the mechanism has been stopped and a brake or brakes
applied or such other measures taken as to ensure that the
vehicle cannot accidentally be put in motion in the absence
of the driver."
In view of this provision apart from the implied mandate to
the licensed driver not to place an unlicensed person in
charge of the vehicle. There is also a statutory obligation
on the said person not to leave the vehicle unattended and
not to place it in charge of an unlicensed driver. What is
prohibited by law must be treated as a mandate to the em-
ployee and should be considered sufficient in the eye of law
for excusing non-compliance with the conditions. It cannot
therefore in any case be considered as a breach on the part
of the insured. To construe the provision differently would
be to re-write the provision by engrafting a rider to the
effect that in the event of the motor vehicle happening to
be driven by an unlicensed person regardless of the circum-
stances in which such a contingency occurs, the insured will
not be liable under the contract of insurance. It needs to
be emphasised that it is not the contract of insurance which
is being interpreted. It is the statutory provision defining
the conditions of exemption which is being interpreted.
These must therefore be interpreted in the spirit in which
the same have been enacted accompanied by an anxiety to
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ensure that the protection is not nullified by the backward
looking interpretation which serves to defeat the provision
rather than to fulfil its life-aim. To do otherwise would
amount to nullifying the benevolent provision by reading it
with a non-benevolent eye and with a mind not tuned to the
purpose and
1. "Exculpation of a promisor. Given a presumption of abso-
luteness of obligation, a promisor who is alleged to have
failed to perform must either prove performance or establish
some positive excuse for any failure on his part. In other
words he must find exculpation from what is presumed to be a
breach of contract, either in the contract itself or in some
external rule of law. These are five grounds for exculpa-
tion: construction of the contract; the doctrine of frustra-
tion; the existence of an implied term; the presence of an
exclusion clause; and the application of a statutory rule or
provision. These will be considered later."
765
philosophy of the legislation without being informed of the
true goals sought to be achieved. What the legislature has
given, the Court cannot deprive of by way of an exercise in
interpretation when the view which renders the provision
potent is equally plausible as the one which renders the
provision impotent. In fact it appears that the former view
is more plausible apart from the fact that it is more de-
sirable. When the option is between opting for a view which
will relieve the distress and misery of the victims of
accidents or their dependents on the one hand and the equal-
ly plausible view which will reduce the profitability of the
insurer in regard to the occupational hazard undertaken by
him by way of business activity, there is hardly any choice.
The Court cannot but opt for the former view. Even if one
were to make a strictly doctrinaire approach, the very same
conclusion would emerge in obeisance to, the doctrine of
’reading down’ the exclusion clause in the light of the
’main purpose’ of the provision so that the ’exclusion
clause’ does not cross swords with the ’main purpose’ high-
lighted earlier. The effort must be to harmonize the two
instead of allowing the exclusion clause to snipe success-
fully at the main purpose. This theory which needs no sup-
port is supported by Carter’s "Breach of Contract" Vide
paragraph 251. To quote:-
"Notwithstanding the general ability of con-
tracting parties to agree to exclusion clause
which operate to define obligations there
exists a rule, usually referred to as the
"main purpose rule", which may limit the
application of wide exclusion clauses defining
a promisor’s contractual obligations. For
example, in Glynn v. Margetson & Co., [1893]
A.C. 351 at 357 Lord Halsbury L.C. stated:
"It seems to me that in construing this docu-
ment, which is a contract of carriage between
the parties, one must be in the first instance
look at the whole instrument and not at one
part of it only. Looking at the whole instru-
ment, and seeing what one must
regard ......... as its main purpose, one
must reject words, indeed whole provisions, if
they are inconsistent with what one assumes to
be the main purpose of the contract."
Although this rule played a role in the devel-
opment of the doctrine of fundamental breach,
the continued validity of the rule was ac-
knowledged when the doctrine was rejected by
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the House. of Lords in Suissee Atlantigue
Societed’
766
Armement Maritime S.A.v.N.V. Rotterdamsche
Kolen Centrale, [1967] 1 A.C. 361 at 393,412-
413,427-428, 430. Accordingly, wide exclusion
clauses will be read down to the extent to
which they are inconsistent with the main
purpose, or object of the contract." _
(Exphasis added).
In our opinion, therefore, the High Courts of Gujarat
and Andhra Pradesh are right and the High Courts of Orissa,
Patna and Madhya Pradesh are in error. The exclusion clause
does not exonerate the Insurer.
The appeal accordingly fails and is dismissed with costs.
A.P.J. Appeal
dismissed.
767