Ram Shabad Yadav vs Harilal
2023 Latest Caselaw 6943 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

Court No. - 74
 
Case :- FIRST APPEAL FROM ORDER No. - 217 of 2018
 
Appellant :- Ram Shabad Yadav
 
Respondent :- Harilal
 
Counsel for Appellant :- Mr Satyendra Pandey
 
Counsel for Respondent :- Prem Chand Srivastava,Rahul Sahai
 
Hon'ble Ajay Bhanot,J.

1. This first appeal from order arises out of the judgment and award dated 13.10.2017 passed by the learned Motor Accident Claims Tribunal/learned Additional District Judge, Maharajganj in Motor Accident Claim Petition No.114 of 2014 (Harilal and others Vs. Ram Shabad Yadav and others).

2. The owner-appellant contesting the liability to pay the compensation.

3. Briefly the case of the claimants before the learned tribunal was that the deceased-Bhanmati died of injuries sustained in an accident which occurred on 02.05.2014 and was caused by the rash and negligent driving of the driver of truck bearing Registration No. UP-52F-0405. The offending vehicle was insured by the respondent Insurance Company. The claimants were dependant on the deceased. The deceased was 44 years of age at the time of the accident.

4. The learned tribunal in the impugned award found for the claimants by holding that the driver of the offending truck drove negligently and was solely responsible for the accident which resulted in the death of the deceased. Learned tribunal found that the insurance policy terms were breached. The insurance company was absolved of its liability on this footing, and the owner was made liable to pay the awarded compensation.

5. Shri Satendra Pandey, learned counsel for the appellant-owner contends that the learned tribunal erred in law by absolving the Insurance Company of the liability to pay the compensation. The finding that the appellant-owner had breached the terms of the insurance policy since the insured vehicle was being driven by a person who was not in possession of valid driving licence is perverse. The award was illegal and is liable to be set aside.

6. Shri Aditya Singh Parihar, learned counsel holding brief of Shri Rahul Sahai, learned counsel for the respondent-Insurance Company contends that the award passed by the learned tribunal is lawful and brooks no interference. The liability to pay the compensation is on the owner since there was a breach of the insurance policy.

7. After advancing their arguments, learned counsel for both the parties agree that though many grounds have been pleaded, only the following question fall for consideration in this appeal:-

Whether, in the facts of this case, the learned tribunal erred in law by fixing the liability to pay the compensation on the owner of the offending vehicle?

8. These facts found by the learned tribunal are undisputed. The accident occurred on account of the rash and negligent driving of the offending truck. The offending truck was insured by the respondent-Insurance company.

9. The Insurance company contested the validity of the licence of the driver of the offending vehicle since inception of the claim petition by filing a written statement. The written statement asserts that not only the licence was fake but the owner was fully aware of these facts.

10. The owner as well as the driver in the written statement asserted that the latter was skilled at driving and was in possession of a valid driving licence.

11. It is evident from the facts that the insurance company categorically denied the validity of the licence and pleaded wilful knowledge and liability of the owner in permitting the driver to drive without a valid driving licence. Neither the owner nor the driver appeared in the witness box to establish that the owner had exercised due diligence to ensure that the driver had the requisite driving skill and was in possession of a valid driving licence. Requisite pleadings by the owner/appellant in this regard too are absent.

12. On its part the insurance company introduced form 54 issued by the concerned RTO Office to establish that the driving licence tendered in evidence by the owner of the vehicle as well as the driver was a fake one. Form 54 was never contested by the owner.

13. With these established facts it remains to be seen whether the insurance company can be absolved of its liability and whether entire liability of paying the compensation has to be borne by the owner-appellant.

14. Non possession of a valid driving licence as a ground to deny the insurance cover or fasten liability upon the owner of the vehicle was in issue in a number of cases before various constitutional courts. These were cited at the Bar.

15. The discussion had advantage of good authorities in point which shall also determine the result of the appeal.

16. The question whether the insurance company could be permitted to avoid its liability only on ground that the driver of the offending vehicle at the time of accident was not duly licensed was in issue in United India Insurance Company Ltd. v. Lehru and others1. The Supreme Court in Lehru (supra) held that the insurance company could be absolved of its contractual and statutory obligation only if it established wilful breach of condition of policy by the insured by holding thus:

"20. When an owner is hiring a driver he will therefore have to check whether the driver has a driving licence. If the driver produces a driving licence which on the face of it looks genuine, the owner is not expected to find out whether the licence has in fact been issued by a competent authority or not. The owner would then take the test of the driver. If he finds that the driver is competent to drive the vehicle, he will hire the driver. We find it rather strange that Insurance Companies expect owners to make enquiries with RTO's, which are spread all over the country, whether the driving licence shown to them is valid or not. Thus where the owner has satisfied himself that the driver has a licence and is driving competently there would be no breach of Section 149(2)(a)(ii). The Insurance Company would not then be absolved of liability. If it ultimately turns out that the licence was fake the Insurance Company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive. More importantly even in such a case the Insurance Company would remain liable to the innocent third party, but it may be able to recover from the insured. This is the law which has been laid down in Skandia 's Sohan Lal Passi 's and Kamla 's case. We are in full agreement with the views expressed therein and see no reason to take a different view."

17. Whether fake or forged licence in itself was sufficient for constituting wilful breach of the conditions of the insurance policy or the contract of insurance arose for consideration in National Insurance Co. Ltd. v. Swaran Singh and others2. The Supreme Court in Swaran Singh (supra) underscored the importance of "reasonable care" on part of owner to enquire into the validity of the driver's license by holding thus:

"2. In view of the fact that these petitions involve pure questions of law, it is not necessary to advert to the individual fact pertaining to each matter.

Suffice, however, is to point out that the vehicles insured with the petitioners were involved in accidents resulting in filing of claim applications by the respective legal representatives of the deceased(s) or the injured person(s), as the case may be.

3. Defences raised by the Petitioner company in the claim petitions purported to be in terms of Section 149(2)(a)(ii) of the Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act') were : (a) driving licence produced by the driver or owner of the vehicle was a fake one; (b) driver did not have any licence whatsoever; (c) licence, although was granted to the concerned driver but on expiry thereof, the same had not been renewed; (d) licence granted to the drivers being for one class or description of vehicle but the vehicle involved in the accident was of different class or description; and (e) the vehicle in question was driven by a person having a learner's licence.

34. The question as to whether an insurer can avoid its liability in the event it raises a defence as envisaged in Sub-section (2) of Section 149 of the Act corresponding to sub-section (2) of Section 96 of the Motor Vehicles Act, 1939 had been the subject matter of decisions in a large number of cases.

35. It is beyond any doubt or dispute that under Section 149(2) of the Act an insurer, to whom notice of the bringing of any proceeding for compensation has been given, can defend the action on any of the grounds mentioned therein.

36. However, Clause (a) opens with the words "that there has been a breach of a specified condition of the policy", implying that the insurer's defence of the action would depend upon the terms of the policy. The said sub-clause contains three conditions of disjunctive character, namely, the insurer can get away from the liability when (a) a named person drives the vehicle; (b) it was being driven by a person who did not have a duly granted licence; and (c) driver is a person disqualified for holding or obtaining a driving licence.

37. We may also take note of the fact that whereas in Section 3 the words used are 'effective licence', it has been differently worded in Section 149(2) i.e. ' duly licensed'. If a person does not hold an effective licence as on the date of the accident, he may be liable for prosecution in terms of Section 141 of the Act but Section 149 pertains to insurance as regard third party risks.

38. A provision of a statute which is penal in nature vis-`-vis a provision which is beneficent to a third party must be interpreted differently. It is also well known that the provisions contained in different expressions are ordinarily construed differently.

39. The words 'effective licence' used in Section 3, therefore, in our opinion cannot be imported for sub-section (2) of Section 149 of the Motor Vehicles Act. We must also notice that the words 'duly licensed' used in sub-section (2) of Section 149 are used in past tense.

40. Thus, a person whose licence is ordinarily renewed in terms of the Motor Vechiles Act and the rules framed thereunder despite the fact that during the interregnum period, namely, when the accident took place and the date of expiry of the licence, he did not have a valid licence, he could during the prescribed period apply for renewal thereof and could obtain the same automatically without undergoing any further test or without having been declared unqualified therefor. Proviso appended toSection 14 in unequivocal term states that the licence remains valid for a period of thirty days from the day of its expiry.

64. The proposition of law is no longer res integra that the person who alleges breach must prove the same. The insurance company is, thus, required to establish the said breach by cogent evidence. In the event, the insurance company fails to prove that there has been breach of conditions of policy on the part of the insured, the insurance company cannot be absolved of its liability. (See Sohan Lal Passi (supra) 

65. Apart from the above, we do not intend to lay down anything further i.e. degree of proof which would satisfy the aforementioned requirement inasmuch as the same would indisputably depend upon the facts and circumstances of each case. It will also depend upon the terms of contract of insurance . Each case may pose different problem which must be resolved having to a large number of factors governing the case including conduct of parties as regard duty to inform, correct disclosure, suppression, fraud on the insurer etc. It will also depend upon the fact as to who is the owner of the vehicle and the circumstances in which the vehicle was being driven by a person having no valid and effective licence. No hard and fast rule can therefor be laid down. If in a given case there exists sufficient material to draw an adverse inference against either the insurer or the insured, the Tribunal may do so. The parties alleging breach must be held to have succeeded in establishing the breach of conditions of contract of insurance on the part of the insurer by discharging its burden of proof. The Tribunal, there cannot be any doubt, must arrive at a finding on the basis of the materials available on records.

87.  It may be true as has been contended on behalf of the petitioner that a fake or forged licence is as good as no licence but the question herein, as noticed hereinbefore, is whether the insurer must prove that the owner was guilty of the wilful breach of the conditions of the insurance policy or the contract of insurance. In Lehru's case (supra), the matter has been considered at some details. We are in general agreement with the approach of the Bench but we intend to point out that the observations made therein must be understood to have been made in the light of the requirements of law in terms whereof the insurer is to establish wilful breach on the part of the insured and not for the purpose of its disentitlement from raising any defence or the owners be absolved from any liability whatsoever. We would be dealing in some details with this aspect of the matter a little later.

94. So far as the purported conflict in the judgments of Kamla (supra) and Lehru (supra) is concerned, we may wish to point out that the defence to the effect that the licence held by the person driving the vehicle was a fake one, would be available to the insurance companies, but whether despite the same, the plea of default on the part of the owner has been established or not would be a question which will have to be determined in each case.

95. The court, however, in Lehru (supra) must not read that an owner of a vehicle can under no circumstances has any duty to make any enquiry in this respect. The same, however, would again be a question which would arise for consideration in each individual case.

105. The summary of our findings to the various issues as raised in these petitions are as follows:

xxxxxx

(ii) Insurer is entitled to raise a defence in a claim petition filed under Section 163 A or Section 166 of the Motor Vehicles Act, 1988 inter alia in terms of Section 149(2)(a)(ii) of the said Act.

(iii) The breach of policy condition e.g., disqualification of driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(ii) of section 149, have to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time.

(iv) The insurance companies are, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish 'breach' on the part of the owner of the vehicle; the burden of proof wherefor would be on them.

(v) The court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance of each case.

(vii) The question as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver, (a fake one or otherwise), does not fulfil the requirements of law or not will have to be determined in each case."

18. The insurance company in Pepsu Road Transport Corporation v. National Insurance Company3, resisted its liability by taking the defence that the driver of the vehicle involved in the accident was not duly licensed. The brief facts of the case in Pepsu Road Transport Corporation (supra) were stated in para 2 as under:

"2. Widow and two minor sons of late Gurjinder Singh Modi are claimants before the Motor Accidents Claims Tribunal, Chandigarh in M.A.C.T. No. 63/481 filed in the year 2002. The allegation was that Gurjinder Singh Modi died out of a motor accident on 04.10.2001 on account of the negligent driving of bus no. PB-11-K-8512 of the Pepsu Road Transport Corporation (for short, ''PRTC'), Patiala, the appellant herein. Rs.30,00,000/- was claimed as compensation. Negligence was proved. The Tribunal awarded Rs.11,03,404/- as compensation. However, the insurance company was absolved of its liability since the licence issued to the driver was found to be fake. The insurance company took the Local Commissioner to licensing authority, Darjeeling, West-Bengal and, on verification of the available records, it was reported that no such licence as possessed by the driver has been issued by the said licensing Authority at Darjeeling. Thus, aggrieved, the owner of the vehicle, viz., PRTC, Patiala has come up in appeal."

19. In Pepsu Road Transport Corporation (supra), the responsibility of the owner while employing a driver to avail the benefit of insurance was stated thus:

"10. In a claim for compensation, it is certainly open to the insurer under Section 149(2)(a)(ii) to take a defence that the driver of the vehicle involved in the accident was not duly licensed. Once such a defence is taken, the onus is on the insurer. But even after it is proved that the licence possessed by the driver was a fake one, whether there is liability on the insurer is the moot question. As far as the owner of the vehicle is concerned, when he hires a driver, he has to check whether the driver has a valid driving licence. Thereafter he has to satisfy himself as to the competence of the driver. If satisfied in that regard also, it can be said that the owner had taken reasonable care in employing a person who is qualified and competent to drive the vehicle. The owner cannot be expected to go beyond that, to the extent of verifying the genuineness of the driving licence with the licensing authority before hiring the services of the driver. However, the situation would be different if at the time of insurance of the vehicle or thereafter the insurance company requires the owner of the vehicle to have the licence duly verified from the licensing authority or if the attention of the owner of the vehicle is otherwise invited to the allegation that the licence issued to the driver employed by him is a fake one and yet the owner does not take appropriate action for verification of the matter regarding the genuineness of the licence from the licensing authority. That is what is explained in Swaran Singh's case (supra). If despite such information with the owner that the licence possessed by his driver is fake, no action is taken by the insured for appropriate verification, then the insured will be at fault and, in such circumstances, the insurance company is not liable for the compensation."

20. Breach of conditions under Section 149(2)(a) which absolve the insurer of its liability to be insured, and the conditions regarding driving licence under Section 142(2)(a) was once again was posed before the learned three judge bench of the Supreme Court in Pappu and others v. Vinod Kumar Lamba and another4 . In Pappu (supra) heightened diligence was expected from a vehicle owner once the insurance company disputed its liability by asserting that the insurance policy had been breached and that the offending vehicle was not driven by a person with a valid driving licence. Pappu (supra) emphasised the need for the owner to take specific pleadings and adduce supporting evidence in this regard by stating thus:

"13. In the present case, the respondent No.1 owner of the offending vehicle merely raised a vague plea in the Written Statement that the offending vehicle DIL-5955 was being driven by a person having valid driving licence. He did not disclose the name of the driver and his other details. Besides, the respondent No.1 did not enter the witness box or examine any witness in support of this plea. The respondent No.2 Insurance Company in the Written Statement has plainly refuted that plea and also asserted that the offending vehicle was not driven by an authorised person and having valid driving licence. The respondent No.1 owner of the offending vehicle did not produce any evidence except a driving licence of one Joginder Singh, without any specific stand taken in the pleadings or in the evidence that the same Joginder Singh was, in fact, authorised to drive the vehicle in question at the relevant time. Only then would onus shift, requiring the respondent No.2 Insurance Company to rebut such evidence and to produce other evidence to substantiate its defence. Merely producing a valid insurance certificate in respect of the offending Truck was not enough for the respondent No.1 to make the Insurance Company liable to discharge his liability arising from rash and negligent driving by the driver of his vehicle. The Insurance Company can be fastened with the liability on the basis of a valid insurance policy only after the basic facts are pleaded and established by the owner of the offending vehicle - that the vehicle was not only duly insured but also that it was driven by an authorised person having a valid driving licence. Without disclosing the name of the driver in the Written Statement or producing any evidence to substantiate the fact that the copy of the driving licence produced in support was of a person who, in fact, was authorised to drive the offending vehicle at the relevant time, the owner of the vehicle cannot be said to have extricated himself from his liability. The Insurance Company would become liable only after such foundational facts are pleaded and proved by the owner of the offending vehicle." (emphasis supplied)

21. In Premkumari v. Prahlad Dev5, the Supreme Court once again reiterated the obligation of the owner to satisfy himself regarding the driving skills and validity of the driving license at the time of appointing him by holding thus:

"7. It is clear from the above decision when the owner after verification satisfied himself that the driver has a valid licence and driving the vehicle in question competently at the time of the accident there would be no breach of Section 149(2)(a)(ii), in that event, the Insurance Company would not then be absolved of liability. It is also clear that even in the case that the licence was fake, the Insurance Company would continue to remain liable unless they prove that the owner was aware or noticed that the licence was fake and still permitted him to drive."

22. The nature of verification to be undertaken by an owner while hiring a driver in order to defeat the insurance company's defence against its liability was directly and substantially in issue in Nirmala Kothari v. United India Insurance Ltd6. Upon consideration and in light of the authorities discussed in the preceding paragraphs, the Supreme Court reiterated the legal position in Nirmala Kothari (supra) by holding thus:

"12. While hiring a driver the employer is expected to verify if the driver has a driving licence. If the driver produces a licence which on the face of it looks genuine, the employer is not expected to further investigate into the authenticity of the licence unless there is cause to believe otherwise. If the employer finds the driver to be competent to drive the vehicle and has satisfied himself that the driver has a driving licence there would be no breach of Section 149(2)(a)(ii) and the Insurance Company would be liable under the policy. It would be unreasonable to place such a high onus on the insured to make enquiries with RTOs all over the country to ascertain the veracity of the driving licence. However, if the Insurance Company is able to prove that the owner/insured was aware or had notice that the licence was fake or invalid and still permitted the person to drive, the insurance company would no longer continue to be liable."

23. Similarly, the responsibility of an owner while engaging a driver was explained in Rishi Pal Singh v. New India Assurance Co. Ltd. and others7 in the following terms:

"10. The owner of the vehicle is expcted to verify the driving skills and not run to the licensing authority to verify the genuineness of the driving license before appointing a driver. Therefore, once the owner is satisfied that the driver is competent to driver the vehicle, it is not expected from the owner thereafter to verify the genuineness of the driving license issued to the driver."

24. The undisputed facts on which the judgements of this Court in Kedar Singh v. Sarla Devi and others8 were founded are these. The driving licence of the driver at the time of the accident was found to be fake. The owner merely produced a photocopy of the driving license. The driver was not examined by the owner of the truck nor did the owner enter the witness box. The insurance company filed Form 44 which established that the photocopy of the licence brought in the record by the owner was fake.

25. Siddharth, J. in these facts found that the owner had not taken due reasonable care while appointing the driver and was failed to prove the basic facts required of him in law to avail the benefit of insurance by holding thus:

"29. Regarding the second submission of the learned counsel for the owner of the truck/appellant of the discarding of the validity of driving licence of the truck driver by the tribunal, this court finds that only photocopy of the driving licence of the driver, Bhola was brought on record by the owner /appellant before the tribunal. The vehicle owner never appeared in witness box before the tribunal to prove that the driving licence was given to him by his driver, Bhola and he was satisfied that it is genuine. He also did not proved that he made efforts to see that the driver is competent to drive. He was required to prove before the tribunal that he had taken reasonable care in employing the driver, who was qualified and competent to drive the vehicle. The liability as between the insurer and the insured depends upon the reasonable care taken by the owner of the vehicle, while employing a qualified and competent driver. These basic facts are required to be proved by the owner of the vehicle before the tribunal so as to protect himself from the liability viz- a- viz insurance company before the Motor Accidents Claims Tribunal.

30. The insurance company in the present case produced the Form-54 before the tribunal which proved that the driving licence produced by the owner of the truck/appellant was not of his driver, Bhola but it was of another person, Krishna Gopal. The owner of the truck/ appellant clearly did not proved that his driver supplied him fake/forged copy of the driving licence since the driver of the owner of the truck-appellant, namely, Bhola, was not produced before the tribunal to testify the correct facts.

31. Learned counsel for the insurance company has rightly pointed out to the judgment in the case of Pappu and another(supra) wherein Apex court has held that insurance company can be held liable only when foundational facts are pleaded and proved by the owner of the offending vehicle by the owner of the truck/appellant before the tribunal."

26. The argument on behalf of the Insurance Company that the Form 54 was not admissible in evidence is liable to be rejected. The certified copy of Form 54 introduced as evidence by the Insurance Company established that the driving licence. The said document was not successfully challenged and was rightly found to be genuine by the learned tribunal.

27. The judgement of this Court in Kedar Singh (supra) quoted the judgement rendered by this Court in Oriental Insurance Co. Ltd. Vs. Smt. Poonam Kesarwani and others9 with approval and held:

"16. ....The insurance company on its part investigated the validity of the driving licence(DL No. 2222/RJ/2005) and consequently filed the report received from the concerned R.T.O. under Form 54 before the tribunal. The bare perusal of the report received on Form 54 would go on to show that the driving licence no. 2222/RJ/2005 was issued in favour of one Krishna Goapal and not in the name of the alleged offending driver i.e, Bhola. As such the photocopy of the driving licence of Bhola filed by owner of the truck/appellant was a fake document. It is a settled proposition of law that Form 54 is a public document which does not requires further evidence of formal proof by examining a witness. It is further submitted that this Court in paragraph no.12 of Oriental Insurance Co. Ltd. Vs. Smt. Poonam Kesarwani and others, reported in 2009() ADJ,1 has held accordingly:-

"Form 54 being a certified copy of a public document namely the state register of driving licencse, need not to be proved by examining a witness. Once a certified copy of the entries made in the register maintained under Section 26(1) read with Rule 23 is issued in form-54 it is admissible in evidence under section 77 of the Evidence Act and no further proof of form 54 by oral evidence by examining witnesses is required."

17. The insurance company on its part had duly discharged its burden by filing Form-54(which has been held to be a public document) which categorically established beyond doubt that the photocopy of the driving license brought on record by the owner/appellant was a fake document, as such, breach of policy condition was fully substantiated for which no liability whatsoever could have been fastened upon the insurance company /appellant."

28. The burden lies on the owner of proving foundational facts including the satisfaction of the authenticity of the driver's licence prior to the latter's appointment. This burden can be discharged in light of the standards and criteria provided by authorities in point discussed earlier.

29. However, in the wake of the preceding discussion, this Court finds that the owner had failed to establish the aforesaid foundational facts. The owner did not appear in the witness box to prove that the driving licence of the driver was produced before him and that he was satisfied with its genuineness at the time of the driver's appointment. Further, pleadings entered by the owner-appellant before the learned tribunal too are deficient in this regard.

30. No case for interference in the impugned award is made out. The appeal is dismissed.

Order Date :- 03.03.2023

Dhananjai