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Civil Petition for Special Leave to Appeal No. 364 of 1969, decided on 10th December 1969.
(On appeal from the judgment and order of the High Court of West Pakistan, Lahore, dated the 18th September 1969, in Regular First Appeal No. 74 of 1964).
S. 96 (2)‑Grounds which Insurance Company may take in suit for compensation by third party‑Confined to provisions of S. 96 (2)‑Not permissible to Insurance Company to resist suit by third party on any other ground.
Gul Muhammad Khan, Advocate Supreme Court instructed by Tanvir Ahmad, Advocate‑on‑Record for Petitioner.
Nemo for Respondents.
Date of hearing: 10th December 1969.
‑A decree for payment of Rs. 25,960 has been passed on appeal by the High Court in favour of the heirs of one Khushi Muhammad, respondent herein, who while driving a tractor was killed in a collusion with the bus owned by the respondent No. 5 and driven by the respondent No. 6. Out of the decretal amount Rs. 20,000 is to be paid by the petitioner with whom the bus was insured against third party risk and the balance is to be paid by the respondents and 6.
The suit was filed by the respondents 1 to 4 against respon dents 5 and 6 and a notice given to the petitioner as required by section 96 of the Motor Vehicles Act, 1939. In their written statement the petitioner raised numerous objections, e. g. that the suit was barred by time and that the accident had taken place due to negligence on the part of respondent No. 6. The grounds which an insurance company may take in a suit for compensation by the third party being confined to subsection (2) of section 96, the trial Court did not frame any issues to cover, these grounds.
In their, defence respondents 5 and 6, however, raised a number of grounds including the plea that the accident in which Khushi Muhammad died, did not take place due to rash and negligent driving of the bus by the respondent No. 6. The maintainability of the suit and the quantum of damages were also contested. The trial Judge found that the accident was not caused as a result of rash‑and negligent driving of the bus by respondent No. 6 and dismissed the suit on this ground.
On an appeal by respondents 1 to 4 the High Court, however, came to a contrary conclusion and as mentioned above decreed the suit in the sum of Rs. 25,920. The respondents 5 and 6 have not chosen to contend against the decree passed against them by the High Court, but the petitioner‑company feels aggrieved and seeks leave to appeal.
Mr. Gul Muhammad appearing for the petitioner contended that it is permissible to an insurance company to resist the suit by a third party on grounds other than the grounds specified in section 96 (2) of the Motor Vehicles Act. There is no warrant for the construction placed by the learned counsel on the plain words employed in section 96 (2): "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:‑ .
(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 organized 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 persons 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 license 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 viod 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."
All other grounds of defense are by necessary implication exclud ed by these words. This is further vouched by subsection (6) of section 96 which lays down that:
"No insurer to whom the notice referred to in subsection (2) or subsection (2‑A) has been given shall be entitled to' avoid his liability to any person entitled to the benefit of any such judgment as is referred to in subsection (1) or subsection (2‑A) otherwise than in the manner provided for in subsec tion (2) . . . ."
As seen the terms of subsection (2) do not entitle an insurance company to defend the action by a third party on grounds of limitation or negligence as was set out in the written statement of the petitioner.
Mr. Gul Muhammad contended that if this restricted inter pretation is placed on section 96 (2) Insurance companies may become victims of collusive and fraudulent decrees obtained by third parties against the insured. As collusion and fraud were not alleged in the present case it is unnecessary to examine the plea though it may be said that a general rule framed vitiates every transaction including a decree or order passed by a Court. The contention raised by the learned counsel is, therefore, not conclusive of the interpretation of section 96 (2).
The petitioner is accordingly precluded from raising the grounds of limitation and negligence in support of the petition for leave to appeal.
The petition is dismissed.
Leave refused.
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