•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) or under
•the provisions of section 163A 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.
(2)No sum shall be payable by an insurer under sub-section ( 1) in respect of any
•judgment or award unless, before the commencement of the proceedings in which the
•judgment or award is given the insurer had notice through the Court or, as the case may be,
•the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or
•award so long as execution is stayed thereon pending an appeal; and an insurer to whom
•Validity of
•policies of
•insurance
•issued in
•reciprocating
countries.
•Duty of
•insurers to
•satisfy
•judgments and
•awards against
•persons
•insured in
•respect of
•third party
risks.
•70
•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:—
(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 non-
•disclosure of a material fact or by a representation of fact which was false in some
•material particular.
(3)Where any such judgment as is referred to in sub-section ( 1) is obtained from a
•Court in a reciprocating country and in the case of a foreign judgment is, by virtue of the
•provisions of section 13 of the Code of Civil Procedure, 1908 conclusive as to any matter
•adjudicated upon by it, the insurer (being an insurer registered under the Insurance Act,
•1938 and whether or not he is registered under the corresponding law of the reciprocating
•country) shall be liable to the person entitled to the benefit of the decree in the manner and
•to the extent specified in sub-section (1), as if the judgment were given by a Court in India:
•Provided that no sum shall be payable by the insurer in respect of any such judgment
•unless, before the commencement of the proceedings in which the judgment is given, the
•insurer had notice through the Court concerned of the bringing of the proceedings and the
•insurer to whom notice is so given is entitled under the corresponding law of the reciprocating
•country, to be made a party to the proceedings and to defend the action on grounds similar
•to those specified in sub-section ( 2).
(4)Where a certificate of insurance has been issued under sub-section (3) of section
•147 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 clause (b) of sub-section (2) shall, as respects such liabilities as are required
•to be covered by a policy under clause (b) of sub-section (1) of section 147, be of no effect:
•Provided that any sum paid by the insurer in or towards the discharge of any liability
•of any person which is covered by the policy by virtue only of this sub-section shall be
•recoverable by the insurer from that person.
(5)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 amount 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.
(6)In this section the expressions “material fact” and “material particular” means,
•respectively a fact or particular of such a nature as to influence the judgment of a prudent
•5 of 1908
•71
•insurer in determining whether he will take the risk and, if so at what premium and on what
•conditions and the expression “liability covered by the terms of the policy” means a liability
•which is covered by the policy or which would be so covered but for the fact that the insurer
•is entitled to avoid or cancel or has avoided or cancelled the policy.
(7)No insurer to whom the notice referred to in sub-section (2) or sub-section (3) has
•been given shall be entitled to avoid his liability to any person entitled to the benefit of any
•such judgment or award as is referred to in sub-section (1) or in such judgment as is referred
•to in sub-section (3) otherwise than in the manner provided for in sub-section (2) or in the
•corresponding law of the reciprocating country, as the case may be.
Explanation.—For the purpose of this section, "Claims Tribunal" means a Claims
•Tribunal constituted under section 165 and "award" means an award made by that Tribunal
•under section 168.
