National Insurance Company vs Bhagwati Devi And Ors.
2006 Latest Caselaw 953 Del

JUDGMENT

Sanjiv Khanna, J.

1. The present appeal under Section 173 of the Motor Vehicles Act, 1982 (hereinafter referred to as the Act, for short) has been filed by the National Insurance Company Ltd. (hereinafter referred to as the appellant, for short) against the judgment and award dated 15th February, 2000 passed by the Motor Vehicles Claims Tribunal in Claim Petition no. 85/1992 titled Smt. Bhagwati Devi v. A.K. Sharma and others.

2. It is submitted on behalf of the appellant that the Insurance Company should not have been made jointly and severally liable to make payment of the awarded amount of Rs.35,000/- along with simple interest @ 12% per annum as the driver of the insured vehicle was holding a fake license.

3. Smt. Bhagwati Devi, the claimant before the learned Tribunal and respondent no.1 before this Court, sustained injuries in a road accident on 4th April, 1995 after being hit by a speeding matador van bearing no. HR-29-C9504. As a result, she suffered injuries and had fractured her leg and had to be admitted in a hospital for treatment.

4. On the question of liability of the Insurance Company the driver of the offending vehicle, Mr. Ajit Kumar Sharma was examined as a witness by the insurance company. In his statement he had deposed that he had a driving license at the time of the accident and the said license was issued by the transport office at Guwhati. He had further stated that he had actually gone there to get the said license. He denied that the license was fake. The appellant had also examined Mr. B. Pathak an officer from the transport office, Kamru, Guwhati who deposed that no driving license had been issued in faovur of the driver, Mr. A.K. Sharma.

5. Learned Tribunal rejected the contention of the appellant-Insurance Company that it was not jointly and severally liable inpsite of the testimony of PW-2, inter alia, holding that the owner was not guilty of breach of the terms and conditions of the policy. While doing so, ld. Tribunal relied upon the judgment of Himachal Pradesh High Court in the case of Sukhinder Singh v. Bhagwati Devi and Ors. reported in 1996 ALJ 12892 and National Insurance company v. Ishru Devi and Ors. .

6. After filing of the present Appeal, notice was issued to the respondents including the owner of the vehicle who had failed to appear before the learned Tribunal and had been proceeded ex-parte. The claimant and the owner of the vehicle have filed their replies. Along with the reply the owner has also enclosed copy of the driving license issued in favor of the respondent no.2-Mr. A.K. Sharma.

7. From the facts stated above, it is apparent that the driver-Mr. A.K. Sharma from the very beginning had stated that he was holding a valid driving license as on the date of the accident. Even before the ld. Tribunal he reiterated that he had a valid driving license. In his testimony Mr. A.K. Sharma had stated that he had himself gone to Guwhati and had got the license issued. Photocopy of the driving license was also placed on record. It is not the case of the insurance company that any reasonable man after examining the driving license would have suspected that the license was forged and fabricated and not a genuine license. The law does not require owner of the vehicle to himself go and verify from the licensing authority whether a driving license is genuine or forged, unless there is some reasons to suspect that the driving license is fabricated and acting as a reasonable man he should have made further enquries but acted with negligence. The owner cannot be held to be guilty where he had no cause or ground to question and doubt about the authenticity and genuineness of the license. The appellant has also not been able to discharge the onus that the owner was negligent and had failed to take due care and caution before employing Mr. A.K. Sharma as a driver. Reference in this regard may be made to the judgment of the Apex Court in the case of National Insurance Co. Ltd. v. Swaran Singh . The relevant portion of the said judgment is quoted below:

92. It may be true as has been contended on behalf of the petitioner that a fake or forged license is as good as no license but the question herein, as noticed hereinbefore, is whether the insurer must prove that the owner was guilty of the willful breach of the conditions of the insurance policy or the contract of insurance. In Lehru case the matter has been considered in some detail. 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 the law in terms whereof the insurer is to establish willful breach on the part of the insured and not for the purpose of its disentitlement from raising any defense or for the owners to be absolved from any liability whatsoever. We would be dealing in some detail with this aspect of the matter a little later.

99. So far as the purported conflict in the judgments of Kamla and Lehru is concerned, we may wish to point out that the defense to the effect that the license 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.

100. This Court, however, in Lehru must not be read to mean that an owner of a vehicle can under no circumstances have 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.

101. The submission of Mr Salve that in Lehru case, this Court has, for all intent and purport, taken away the right of an insurer to raise a defense that the license is fake does not appear to be correct. Such defense can certainly be raised but it will be for the insurer to prove that the insured did not take adequate care and caution to verify the genuineness or otherwise of the license held by the driver.

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

(i)Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third-party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.

(ii) An insurer is entitled to raise a defense 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 the driver or invalid driving license of the driver, as contained in Sub-section (2)(a)(ii) of Section 149, has to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving license or disqualification of the driver for driving at the relevant time, are not in themselves defenses available to the insurer against either the insured or the third parties. To avoid its liability towards the insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfillling the condition of the policy regarding use of vehicles by a duly licensed driver or one who was not disqualified to drive at the relevant time.

(iv) Insurance companies, however, with a view to avoid their liability must not only establish the available defense(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 the said burden would be discharged, inasmuch as the same would depend upon the facts and circumstances of each case.

(vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid license by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards the insured unless the said breach or breaches on the condition of driving license is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply ?the rule of main purpose? and the concept of ?fundamental breach? to allow defenses available to the insurer under Section 149(2) of the Act.

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

(viii) If a vehicle at the time of accident was driven by a person having a learner?s license, the insurance companies would be liable to satisfy the decree.

(ix) The Claims Tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third party arising in use of motor vehicle. The said power of the Tribunal is not restricted to decide the claims inter se between claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defense or defenses to the insurer, the Tribunal has necessarily the power and jurisdiction to decide disputes inter se between the insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and the award made thereon is enforceable and executable in the same manner as provided in Section 174 of the Act for enforcement and execution of the award in favor of the claimants.

(x) Where on adjudication of the claim under the Act the Tribunal arrives at a conclusion that the insurer has satisfactorily proved its defense in accordance with the provisions of Section 149(2) read with Sub-section (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the Tribunal. Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the Tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by Sub-section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favor of the insurer within thirty days from the date of announcement of the award by the Tribunal.

(xi) The provisions contained in Sub-section (4) with the proviso there under and Sub-section (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover the amount paid under the contract of insurance on behalf of the insured can be taken recourse to by the Tribunal and be extended to claims and defenses of the insurer against the insured by relegating them to the remedy before regular court in cases where on given facts and circumstances adjudication of their claims inter se might delay the adjudication of the claims of the victims.

8. In view of the above, I do not find any merit in the present appeal and the same is accordingly dismissed. No costs.