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Issues Involved:
1. Whether the insurer is entitled to claim immunity from a decree obtained by the dependents of the victim of a fatal accident due to an exclusion clause in the insurance policy. 2. Interpretation of Section 96(2)(b)(ii) of the Motor Vehicles Act regarding the insurer's liability. Summary: Issue 1: Insurer's Immunity Claim The Supreme Court addressed the conflicting views among various High Courts on whether an insurer can claim immunity from a decree obtained by the dependents of a victim of a fatal accident due to an exclusion clause in the insurance policy. The exclusion clause in question pertains to driving by a named person or persons who are not duly licensed or have been disqualified from holding or obtaining a driving license. The facts of the case were undisputed. The Claims Tribunal and the High Court found that the driver of the truck was grossly negligent by leaving the vehicle with its engine running and the ignition key in the ignition lock, which led to the cleaner taking control and causing the accident. The insured owner was held vicariously liable along with the driver and the cleaner. The High Court concluded that the insurer could not claim exemption on the ground that the owner had committed a breach of the specified condition because the insured had not permitted the cleaner to drive the vehicle. The negligence was solely on the part of the driver, who was a licensed driver employed by the insured. Issue 2: Interpretation of Section 96(2)(b)(ii) The Supreme Court examined the validity of the insurer's argument in light of Sections 96(1) and 96(2)(b)(ii) of the Motor Vehicles Act. The Court reviewed various High Court decisions, noting that some courts had exonerated insurers based on the exclusion clause without thoroughly analyzing the statutory provisions. The Court emphasized that the exclusion clause must be interpreted in a manner consistent with the legislative intent to protect victims of motor vehicle accidents. The Court held that the exclusion clause does not provide absolute immunity to the insurer. The insurer must prove that the insured was guilty of a deliberate breach of the condition. If the insured had done everything within their power to comply with the condition, such as employing a licensed driver, the insurer could not claim immunity. The Court further stated that the exclusion clause should be "read down" to align with the main purpose of the legislation, which is to ensure compensation for victims of motor vehicle accidents. The Court concluded that the High Courts of Gujarat and Andhra Pradesh were correct in holding that the exclusion clause does not exonerate the insurer, while the High Courts of Orissa, Patna, and Madhya Pradesh were in error. Conclusion: The Supreme Court dismissed the appeal, holding that the insurer could not claim immunity based on the exclusion clause, and upheld the judgments of the High Courts of Gujarat and Andhra Pradesh. The appeal was dismissed with costs.
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