24 April 1964
Supreme Court


Case number: Appeal (civil) 1043 of 1963






DATE OF JUDGMENT: 24/04/1964


CITATION:  1964 AIR 1736            1964 SCR  (7) 867  CITATOR INFO :  D          1968 SC2110  (2)  R          1988 SC1332  (13)

ACT: Motor Vehicles Act-(4 of 1939), ss. 93 to 96-Scope of.

HEADNOTE:  A had insured his car with the appellant under a comprehen- sive  policy.  A permitted B, (who had insured his  own  car with  -another  company) to drive his car and  while  B  was driving the car it met with an accident.  As a result of the accident died and D sustained serious injuries.  Both C  and D  were  in the car.  The heirs of C and D filed  suits  for damages.  Notices under s. 96(2) of the Motor Vehicles  Act, 1939  were issued to the appellant who thereupon took out  a Chamber  Summons contending that the notice was bad in  law. Alternatively  it  was  contended  that  the  appellant   be permitted  to defend the suit in the name of the  defendant. The  Court held that the notices were bad.   The  plaintiffs filed  Letters Patent appeals with success and  the  Chamber Summons  were dismissed and the trial Judge was directed  to hear the alternative prayer.  Against this Order the present appeal was filed with special leave. The  contention of the appellant was that in view  of  para- graph 4 of B’s own policy issued by the other company  which indemnified  B against any liability incurred by him  whilst personally  driving  a private car not belonging to  him  or hired  by  him. under a Hire-Purchase agreement, B  was  not included among persons indemnified in para. 3 of A’s  policy which the appellant had issued on account of proviso (a)  to the  said para.  The respondent contended that this  proviso is  not  a limitation on the class  of  persons  indemnified under  para. 3 that class being the drivers driving A’s  car insured under the policy but merely amounted to a  condition affecting the liability of the company vis a vis the  driver who was entitled to be indemnified under any other policy. Held:  (i) From a consideration of ss. 93, 94, 95 and 96  of the Motor Vehicles Act it follows that if under the terms of the  policy  B can be said to be the  person  insured  under Para.  3  ,of  the policy, the company would  be  liable  to satisfy the decree if any passed against B.



(ii)The  appellant by agreeing with the person who  effects the  policy,  to  insure  him  against  liability  to  third parties,  takes  upon  itself the entire  liability  of  the person  effecting the insurance.  It is open to the  insurer not to -extend the indemnity to the insured to other persons but if it extends it to other persons, it cannot restrict it vis a, vis the right of the third party ,entitled to damages to  recover  them  from the insured, a right  which  is  not disputed.   A proviso meant to exempt certain  persons  from the  general  classification  will have  to  be  related  to considerations affecting it and is not to be related to such ,classified  person’s  right  to indemnity  from  any  other insurer. (iii)The cl. (4) of s. II of B’s policy with the  other company does not make that policy to be a policy within  the meaning of  L/P(D))1SCI-28(a) 368 s.94  of the Act in relation to A’s car by whose  user  B incurred  liabilities  sought to be established in  the  two suits.   Such a policy and any indemnity under it cannot  be used  for  sub-classifying drivers specified in  the  policy issued to A by the appellant. (iv)The  High  Court was correct in holding  that  the  ap- pellant  had insured B in view of para. 3 of s. II  of  that policy and that it comes within the expression insurer in s. 96 of the Act.

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  1043-1044 of  1963.   Appeals by special leave from the  judgment  and decree  dated  April  8, 1963 of the Bombay  High  Court  in Appeals Nos. 10 and 11 of 1962. S.T. Desai, V. N. Thakar, J. B. Dadachanji, 0. C.  Mathur and  Ravinder  Narain,  for  the  appellant  (in  both   the appeals). G.S. Pathak, 0. P. Malhotra and 1. N. Shroff, for respon- dent No. 1 (in both the appeals). V.J. Merchant, for respondents Nos. 2 and 4 to 7 (in C.A. No. 1043/1963). April 24, 1964.  The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.-These appeals, by special leave, arise in the following circumstances: S.  N. Asnani owned Chevrolet Car bearing registered No.  AA 4431.   He  insured it with the New  Asiatic  Insurance  Co. Ltd., hereinafter referred to as the company, under a policy dated November 26, 1957.  Asnani permitted Pessumal Dhanamal Aswani,  hereinafter  called Pessumal, to  drive  that  car. When  Pessumal  was driving the car with  Daooji  Radhamohan Meherotra  and Murli Dholandas in the car, the car met  with an  accident as a result of which Meherotra died  and  Murli received injuries. Pessumal himself owned a Pontiac car which had been  insured with  the Indian Trade & General Insurance Co.  Ltd.,  under policy No. Bombay P.C. 42733-2, dated November 18, 1957. The heirs of Meherotra instituted suit no.70 of 1959 against Pessumal  for  the  recovery of Rs.  2,50,000/-  by  way  of damages with interest.  Murli instituted suit no. 71 of 1959 against  Pessumal  to  recover  Rs.  1,50,000/-  by  way  of damages. Notices under s. 96(2) of the Motor Vehicles Act, 1939  (Act IV of 1939), hereinafter called the Act, were issued to  the New Asiatic Insurance Co, Ltd.  The notice was given to  the company  as the defendant’s liability to third  parties  had



been.  insured with it under its policy no.   MV/4564.   The company  then took out Chamber Summons and it was  contended that  notice  under s. 96(2) of the Act was bad in  law  and should  be set aside and that the company was not liable  to satisfy any 869 judgment  which  might  be passed in the  suit  against  the defendant.  Alternatively, it was prayed that the company be added as a party defendant to the suit and/or be  authorised to  defend the suit in the name of the defendant.   Tarkunde J., held the notice issued to the company in the suits under s.  96(2) of , the Act, to be bad in law  and,  accordingly, set them aside. The plaintiffs then filed Letters Patent Appeals which  were allowed  and the Chamber Summonses were dismissed.   It  was directed  that  the trial Judge would hear  the  alternative prayers  in  the Chamber Summonses and  make  the  necessary orders, It is against this order in each of the appeals that the  company  has preferred these appeals,  after  obtaining special leave. To  appreciate the contentions of the parties in  these  ap- peals,  reference may be made to certain provisions  in  the two  policies.  The various provisions in the  two  policies are   identical  in  matters  affecting  the  question   for determination before us. We, therefore, set out the relevant provisions  from the policy issued by the company and  would refer to differences, if any, at the proper place. The  policy  is  described as  ’Private  Car  (Comprehensive Policy)’.   The policy issued by the other company does  not so describe it, but it is also a Comprehensive Policy as the premium charged is on that basis.  The policy insures, under Section  I against loss or damage, under Section II  against liability  to  third parties and under Section  III  against liability  for  medical expenses.   Thereafter,  follow  the general exceptions and conditions. Para  1 of Section II indemnifies the insured,  i.e.  Asnani who effected the policy, in the event of accident caused  by or arising out of the use of the motor car, against all sums which  he  may become legally liable to pay  in  respect  of death  or  of bodily injury to any person.  Paras 3  and  4, generally  known as ’Other drivers’ ’Extension  Clause’  and ’Other Vehicles Extension Clause’ respectively, are material and are set out in full:               "3. In terms of and subject to the limitations               of  the  indemnity which is  granted  by  this               section  to  the  Insured  the  Company   will               indemnify any driver who is driving the  Motor               Car  on  the  Insured’s  order  or  with   his               permission provided that such Driver: -               (a)is  not entitled to indemnity under  any               other policy.               (b)shall  as  though he  were  the  Insured               observe,  fulfil and be subject to the  terms,               exceptions and conditions of the policy in  so               far as they can apply.               870               4.    In   terms   of  and  subject   to   the               limitations of the indemnity which is  granted               by  this Section in connection with the  Motor               Car  the  Company  will  indemnity  which   is               granted  by this Section in  conPrivate  Motor               Car  (but not a Motor Cycle) not belonging  to               him and not hired to him under a Hire Purchase               Agreement". Under  the heading ’Avoidance of certain terms and right  of



recovery’, the policy states:-               "Nothing  in  this Policy or  any  endorsement               hereon  shall affect the right of  any  person               indemnified by this Policy or any other person               to recover an amount under or by virtue of the               provisions  of the Motor Vehicles  Act,  1939,               section 96.               But the Insured shall repay to the Company all               sums  paid  by the Company which  the  Company               would not have been liable to pay but for  the               said provisions." Condition 6 reads:               "6. If at the time any claim arises under this               Policy  there is any other existing  insurance               covering the same loss damage or liability the               Company   shall  not  be  liable  to  pay   or               contribute  more than its rateable  proportion               of  any  loss  damage  compensation  costs  or               expense.  Provided always that nothing in this               Condition  shall  impose on  the  Company  any               liability from which but for this Condition it               would have been relieved under proviso (a)  of               Section II-3 of this Policy". The  Schedule to the policy mentions the limitations  as  to use and under heading ’Driver’ notes               (a)Any person: -               (b)The  insured may also drive a motor  car               not  belonging  to him and not  hired  to  him               under a Hire Purchase Agreement.               Provided  that  the  person  driving  holds  a               licence to drive the Motor Car or has held and               is  not disqualified for holding or  obtaining               such a licence". At the end of the Schedule is an important notice which reads:               "The insured is not indemnified if the Vehicle               is used or driven otherwise than in accordance               with  this Schedule.  Any payment made by  the               Company by reason of wider terms appearing  in               the Certificate in order to comply with  Motor               Vehicles  Act  1939 is  recoverable  from  the               Insured.  See the clause headed ’Avoidance  of               certain terms and right of recovery’." 871 The  contention for the appellant is that in view of para  4 of  Pessumal’s policy issued by the other company,  Pessumal was indemnified against any liability incurred by him whilst personally driving a private motor car not belonging to  him and  not hired to him under a Hire Purchase  Agreement,  and that,  therefore,  lie was not included  among  the  persons indemnified in para 3 of the policy it had issued to  Asnani on account of proviso (a) to para 3 which reads: "provided that such driver is not entitled to indemnity under any other policy". This contention is met by the respondent on the ground  that this  proviso  is not a limitation on the class  of  persons indemnified  under  para  3, that class  being  the  drivers driving  the  Chevrolet car insured under  the  policy,  but merely  amounted to a condition affecting the  liability  of the  company  vis  a  vis the driver  who  was  entitled  to indemnity under any other policy.  The question thus reduces itself to the determination of whether Pessumal comes within the  persons indemnified in para 3 of the policy  issued  by the company. We may now set out the relevant provisions of the Act  which



have  a  bearing  on the  contention  between  the  parties. Chapter  VIII  of the Act provides for  insurance  of  motor vehicles against third party risks.  Section 93 defines  the expressions ’authorised insured’, ’certificate of insurance’ and  reciprocating country’.  The relevant portions  of  the various sections are:               "94.  (1).   No person shall use except  as  a               passenger  or cause or allow any other  person               to  use  a motor vehicle in  a  public  place,               unless  there is in force in relation  to  the               use  of  the vehicle by that  person  or  that               other person, as the case may be, a policy  of               insurance  complying with the requirements  of               this Chapter. Explanation-A  person  driving a motor vehicle merely  as  a paid  employee, while there is in force in relation  to  the use  of  the vehicle no such policy as is required  by  this subsection,  shall not be deemed to act in contravention  of the  sub-section  unless he knows or has reason  to  believe that there is no such policy in force.               (2)   Sub-section  (1) shall not apply to  any               vehicle  owned by the Central Government or  a               State  Government  and  used  for   Government               purposes   unconnected  with  any   commercial               enterprise.               (3)   The   appropriate  Government  may.   by               order,  exempt  from  the  operation  of  sub-               section (1) any               872               vehicle   owned  by  any  of   the   following               authorities. namely: -                     Provided  that  no such order  shall  be               made in relation               to  any such authority unless a fund has  been               established   and   is  maintained   by   that               authority in accordance with the rules made in               that  behalf  under this Act for  meeting  any               liability  arising  out  of  the  use  of  any               vehicle of that authority which that authority               or  any person in its employment may incur  to               third parties.               95.   (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  or  by  a   co-operative               society allowed under section 108 to  transact               the business of an insurer, and               (b)   insures the person or classes of  person               specified   in  the  policy  to   the   extent               specified in sub-section (2)   against     any               liability which may be incurred by him or them               in respect of the death of or bodily injury to               any person caused by or arising out of the use               of the vehicle in a public place:               (4)   A  policy shall be of no effect for  the               purposes  of  this Chapter  unless  and  until               there  is issued by the insurer in  favour  of               the  person by whom the policy is  effected  a               certificate  of  insurance in  the  prescribed               form and containing the prescribed particulars               of any conditions subject to which the  policy               is issued and of any other prescribed matters;               and  different forms, particulars and  matters               may be prescribed in different cases,



             (5)   Notwithstanding    anything    elsewhere               contained  in  any  law, a  person  issuing  a               policy  of insurance under this section  shall               be  liable to indemnify the person or  classes               of  person specified in the policy in  respect               of any liability which the policy purports  to               cover  in  the case of that  person  or  those               classes of person.               96.   (1).    If,  after  a   certificate   of               insurance has been issued under subsection (4)               of section 95 in favour of the person by  whom               a  policy  has  been  effected,  judgment   in               respect of any such liability               873               as 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, 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   unless   before   or   after    the               commencement  of the proceedings in which  the               judgment  is  given  the  insurer  had  notice               through  the  Court  of the  bringing  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 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               (3)Where  a  certificate of  insurance  has               been  issued under sub-section (4) of  section               95  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  subsection  (2)               shall,  as  respects such liabilities  as  are               required  to  be  covered by  a  policy  under               clause  (b) of sub-section (1) of section  95,               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.               (4)   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               874               the  policy in respect of that liability,  the               insure shall be entitled to recover the excess               from that person               (6)No  insurer to whom the notice  referred               to  in subsection (2) or sub-section (2A)  has               been  given  shall be entitled  to  avoid  his               liability  to  any  person en  titled  to  the               benefit of any such judgment as is referred to               in   sub-section  (1)  or   sub-section   (2A)               otherwise  than in the manner provided for  in               sub-section  (2), or in the corresponding  law               of  the State of Jammu and Kashmir or  of               the  reciprocating  country, as the  case  may               be". Chapter VIII of the Act, it appears from the heading,  makes provision  for insurance of the vehicle against third  party risks,  that  is to say, its provisions  ensure  that  third parties  who  suffer  on account of the user  of  the  motor vehicle  would be also to get damages for injuries  suffered and  that  their  ability to get the  damages  will  not  be dependent  on the financial condition of the driver  of  the vehicle whose user led to the causing of the injuries.   The provisions  have  to  be construed in such a  manner  as  to ensure this object of the enactment. Section  94 prohibits, as a matter of necessity,  for  insu- rance  against third-party risk, the use of a motor  vehicle by  any person unless there exists a policy of insurance  in relation to the use of the vehicle by that particular person and  the policy of insurance complies with the  requirements of   Chapter  VIII.   The  policy  must  therefore   provide insurance  against any liability to third party incurred  by that  person  when using that vehicle.   The  policy  should therefore  be with respect to that particular  vehicle.   It may,  however, mention the person specifically or  generally by specifying the class to which that person may belong,  as it may not be possible to name specifically all the  persons who  may have to use the vehicle with the permission of  the person  owning  the  vehicle and  effecting  the  policy  of insurance.   The policy of insurance contemplated by  S.  94 therefore  must  be a policy by which a  particular  car  is insured. Section  95  lays  down the requirements  which  are  to  be complied with by the policy of insurance issued in  relation to  the  use  of a particular vehicle.  They  are:  (1)  the policy must specify the person or classes of person who  are insured  with respect to their liability  to  third-parties; (2)  the policy must specify the extent of  liability  which must  extend to the extent specified in sub-S. (2); and  (3) the  liability which be incurred by the specified person  or classes  of person in respect of death or bodily  injury  to any  person  caused  by or arising out of  the  use  of  the vehicle insured in a public place. 875 Sub-section (4) of s. 95 requires the issue of a certificate of  insurance,  in the prescribed form, to  the  person  who effects the, policy.  The form of the certificate prescribed by  the  Motor Vehicles Third Party Insurance  Rules,  1946, requires the specification of persons or classes of  persons entitled  to  drive.’  The authorised  insurer  is  also  to certify  in  the certificate that the policy  to  which  the certificate   relates,  as  well  as  the   certificate   of insurance,  are issued in accordance with the provisions  of Chapter VIII of the Act.



Sub-section  (5)  of s. 95 makes the insurer liable  to  in- demnify  the  person or classes of person specified  in  the policy in respect of any liability which the policy purports to  cover  in the case of that person or  those  classes  of person.  If the policy covers the insured for his  liability to  third  parties, the insurer is bound  to  indemnify  the person or classes of person specified in the policy The same is the effect of sub-s. (1) of s. 96 which provides that the insurer  is  bound  to pay to the  person  entitled  to  the benefit  of a decree he obtains in respect of any  liability covered  by  the  terms of the  policy  against  any  person insured  by the policy irrespective of the fact whether  the insurer  was  entitled  to avoid or  cancel  or  might  have avoided  or cancelled the policy.  This means that once  the insurer has issued a certificate of insurance in  accordance with sub-s. (4) of s. 95 he has to satisfy any decree  which a  person  receiving injuries from the use  of  the  vehicle insured  obtains against any person insured by  the  policy. He is however liable to satisfy the decree only when he  has been  served with a notice under sub-s. (2) of s.  96  about the proceedings in which the judgment was delivered.  It  is for this reason that a notice under sub-s. (2) of s. 96  was issued  to  the  company  and  it  is  on  account  of   the consequential  liability  in case the plaintiffs’  claim  is decreed  against Pessumal that the appellant challenged  the correctness  of  the allegation that Pessumal was  a  person insured  under  the policy issued by it in  respect  of  the Chevrolet  car.   It follows from a consideration  of  these various  provisions  of  the  Act-and  this  is  not  really disputed  for the appellant-that if under the terms  of  the policy  Pessumal can be said to be the Person insured  under para  3, the company would be liable to -satisfy the  decree if any passed against Pessumal. The whole question then is whether Pesumal comes within  the terms of para 3 of Section II of the policy. Under this paragraph, the company indemnifies any person who is driving the motor-car on the insured’s order or with  his permission.    Pessumal  was  driving  the  car   with   the permission of Asnani who had effected the Policy and  there- fore the company undertook to indemnify Pessum’al in  accor- dance with this provision of para 3. The appellant, however. 876 contends that this provision should not be read as  defining by itself the class of persons insured under it, in view  of the  further  classification  of this class  of  drivers  by proviso  (a).  It is contended that only such  drivers  were indemnified  as  were not entitled to  indemnity  under  any other policy and thus drivers who were entitled to indemnity under  any other policy were taken out of the general  class of  drivers driving the car on the insured’s order  or  with his permission.  We do not agree with this contention. The proviso is not really a classification of drivers but is a restriction on the right of the driver to recover any dam- ages  be had to pay, from the company.  The driver  who  can ,get indemnity from any other company under any other policy is,  under this contractual term, not to get indemnity  from the  company.   The proviso thus, affects  the  question  of indemnity  between a particular driver and the  company  and has  nothing to do with the liability which the  driver  has incurred  to the third party for the injuries caused  to  it and  against which liability- was provided by s. 94  of  the Act  and was affected by the policy issued by  the  company. The  company,  by agreeing with the person who  affects  the policy,  to insure him against liability to  third  parties, takes  upon  itself  the  entire  liability  of  the  person



effecting  the insurance.  It is open to the insurer not  to extend this idemnity to the insured to other persons but  if it extends it to other persons, it cannot restrict it vis  a vis  the  right of the third party entitled to  damages,  to recover  them  from  the  insured,  a  right  which  is  not disputed.   A proviso meant to exempt certain  persons  from the  general  classification  Will have  to  be  related  to considerations affecting it and is not to be related to such classified  persons  right  to  indemnity  from  any   other insurer.   In  this  connection reference  may  be  made  to proviso  (b) which cannot in any case be a proviso  relating to  the  classification of persons to  be  indemnified.   It provides  that  tie  person indemnified under  para  3  will observe, fulfil and be subject to the terms, exceptions  and conditions of the policy in so far as they can apply to him. We  are further of opinion that clause (4) of Section II  of Pessumal’s policy with the other company does not make  that policy to be a policy within the meaning of s. 94 of the Act in  relation  to the Chevrolet car by  whose  user  Pessumal incurred  liabilities  sought to be established in  the  two suits.    The  paragraph  indemnifies  the  insured,   i.e., Pessumal,  whilst personally driving any private motor  car. It  does  not indemnify him against the  liability  incurred when  driving any particular car and therefore, in  view  of what  we  have said earlier, Pessumal’s policy cannot  be  a policy  of insurance in relation to the Chevro. let  car  as required  by  s.  94  of the Act.  Such  a  policy  and  any indemnity  under  it  cannot  be  used  for  sub-classifying drivers specified in the policy ’of the company. 877 The  Act contemplates the possibility of the policy  of  in- surance  undertaking  liability to third  parties  providing such  a contract between the insurer and the  insured,  that is,  the person who effected the policy, as would  make  the company entitled to recover the whole or part of the  amount it  has  paid  to the third party  from  the  insured.   The insurer  thus  acts  as security for the  third  party  with respect to its realising damages for the’ injuries suffered. but  vis a vis the insured, the company does  not  undertake that liability or undertakes it to a limited extent.  It  is in  view of such a possibility that various  conditions  are laid  down  in the policy.  Such  conditions,  however,  are -effective  only  between the insured and the  company,  and have  to  be ignored when considering the liability  of  the company to third parties.  This is mentioned prominently  in the  policy  itself  and  is  mentioned  under  the  heading ’Avoidance of certain terms and rights of recovery’, as well as  in the form of ’An Important Notice’ in the Schedule  to the  policy.  The avoidance clause says that nothing in  the policy or any endorsement thereon shall affect the right  of any person indemnified by the policy or any other person  to recover  an amount under or by virtue of the  provisions  of the  Act.  It also provides that the insured will  repay  to the company all sums paid by it which the company would  not have  been liable to pay but for the said provisions of  the Act.  The ’Important Notice’ mentions that any payment  made by  the company by reason of wider .terms appearing  in  the certificate  in order to comply with the Act is  recoverable from the insured, and refers to the avoidance clause. Thus  the contract between the insured and the  company  may not provide for all the liabilities which the company has to undertake vis a vis the third parties, in view of the provi- sions  of the Act.  We are of opinion that once the  company had  undertaken liability to third parties incurred  by  the per  sons specified in the policy, the third parties’  right



to  recover any amount under or by virtue of the  provisions of  the Act is not affected by any condition in the  policy. Considering  this aspect of the terms of the policy,  it  is reasonable to conclude that proviso (a) of para 3 of Section II  is a mere condition affecting the rights of the  insured who effected the policy and the persons to whom the cover of the policy was extended by the company, and does not come in the  way  of  third parties’ claim against  the  company  on account of its claim against a person specified in para 3 as one to whom cover of the policy was extended. It  has  been contended for the appellant that  it  was  not incumbent on the owner of a car to take out a policy of  in- surance  indemnifying  himself or any  person  permitted  to drive  the  car and that if he does not insure the  car  and uses it he runs the risk of prosecution under s. 125 of  the Act.  This is 878 true,  but  has  no  relevant effect  on  the  question  for decision before us.  Asnani did insure his car with  respect to liability against third persons.  We have to see  whether the company, on account of undertaking that liability can be said to have insured Pessumal on account of his driving  the car  with  the permission of Asnani.  The same may  be  said about  the other contention for the appellant that there  is nothing in the Act which makes it compulsory for an  insurer to  insist that the owner of the car takes out a  policy  in the widest terms possible covering any person who drives the car  with his permission.  The company did agree  under  the policy  to  indemnify  drivers who drove the  car  with  the insured’s   permission.   The  question  is   whether   that undertaking covers Pessumal. Lastly,  we may mention that the question about  tie  proper stage  at  which the question raised by the company  in  the Chamber  notice is to be decided, came up for  consideration at  the hearing.  We however do not propose to  express  any opinion on that point in this case. We are of opinion that the High Court rightly held that  the company had insured Pessumal in view of para 3 of Section II of  the  policy  and that it  comes  within  the  expression ’insurer’  in  s. 96 of the Act.  We therefore  dismiss  the appeals with costs of hearing one set. Appeals dismissed. 879