The Oriental Insurance Co.Ltd. vs Ms.Sonia & Ors.
2008 Latest Caselaw 1961 Del

*      HIGH COURT OF DELHI : NEW DELHI

    MAC App. No.518/2008 & CM No.14400/2008

%            Judgment reserved on: 1st October, 2008

             Judgment delivered on: 6th November, 2008


The Oriental Insurance Company Ltd.,
Oriental House, A-25/27, Asaf Ali Road,
PB No.7037, New Delhi

Through its Regional Office at
88, Janpath, Connaught Circus,
New Delhi.                                ....Appellant

                  Through: Mr. R.N. Sharma, Adv.

                           Versus

1. Ms. Sonia D/o. Lt. Sh. Nirmal Singh,
   R/o. S-19, P-3, F-76, Dwarka,
   New Delhi.

2. Master Mandeep S/o. Lt. Sh. Nirmal Singh

3. Kumari Poonam D/o. Lt. Sh. Nirmal Singh

4. Kumari Deepika D/o. Lt. Sh. Nirmal Singh

All R/o. H.No. RZ-86-A, Dinpur Extn.,
Najzafgarh, New Delhi.

5. Sh. Bharat Singh S/o. Sh. Bahal Singh,
   R/o. Vill. Rewla Khanpur,
   Najafgarh, New Delhi. (Owner of Vechile)

6. Sh. Sanjeev S/o. Sh. Beghraj Tyagi,
   R/o. Village Rewla Khanpur,

MAC No.518/2008                             Page 1 of 22
      Najafgarh, New Delhi. ( Driver of Vehicle)

                                    ...Respondents.

                         Through: Nemo.


Coram:
HON'BLE MR. JUSTICE V.B. GUPTA

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                             Yes

2. To be referred to Reporter or not?                          Yes

3. Whether the judgment should be reported
   in the Digest?                                              Yes

V.B.Gupta, J.

The appellant/Insurance Company has filed the

present appeal under Section 173 of the Motor

Vehicles Act, 1988 ( for short as „Act‟) challenging the

award dated 11th July, 2008, passed by Sh. Suresh

Chand Rajan, Judge MACT (for short as „Tribunal‟).

2. Brief facts of this case are that one Nirmal Singh,

aged 49 years, suffered fatal injuries on 8th December,

2000, due to the accident allegedly caused by

respondent No.6/Sanjeev, who was driving vehicle

No.DL-1P-8827 at a fast speed and in a rash and

negligent manner.

3. The vehicle is owned by respondent No.5/Bharat

Singh and is insured with the appellant.

4. Respondent/owner and driver in their separate

written statements, denied the factum of the accident

as well as the involvement of the offending vehicle in

any accident.

5. Respondent/Driver later on stopped appearing

after filing the written statement. Hence, he was

proceeded ex-parte.

6. Appellant in its written statement admitted the

factum of insurance. However, it took a preliminary

objection stating that the insured submitted claim

form, after the alleged accident to the appellant-

Insurance company in order to take O.D. claim,

wherein name of driver is mentioned as Sh. Vikram

Singh who has valid and effective driving licence.

Accordingly, appellant-Insurance company had

released O.D. Claim on the basis of valid licence of Sh.

Vikram Singh.

7. During the period of investigation, Criminal

record has been obtained through investigator Sh.

Mohinder Kumar Mittal. As per criminal record,

Sh.Sanjeev/Respondent no.6, has been charge sheeted

in respect of F.I.R. No.610/2000 and he had no Driving

Licence and Vikram Singh was not driving the vehicle

at the time of alleged accident.

8. It is further stated that insured Sh.Bharat Singh

concealed the name of driver and projected a false

driver Sh. Vikram Singh in order to take O.D. claim

and throw liability of third party upon appellant.

9. It is also stated that driver Sh. Sanjeev was not

holding any driving licence at the time of alleged

accident. The act of handing over vehicle to driver Sh.

Sanjeev, who was not holding valid and effective

driving licence, by insured/ owner, amounts to willful

default, intentional breach of terms and conditions of

the insurance policy.

10. Vide impugned judgment, the Tribunal awarded

compensation of Rs.20,41,640/- to the claimants and

the appellant was directed to deposit the award

amount within 30 days, failing which it was liable to

pay penal interest @ 12% per annum till realisation.

11. It is contended by learned counsel for the

appellant that the vehicle was being driven by

respondent no.6 i.e. Sanjeev who did not possess a

valid and effective driving licence at the time of

accident.

12. Other contention by appellant‟s counsel is that

since the appellant has challenged the award passed

by the Tribunal for not complying with the provisions

of section 149 of the Act, therefore, no permission

under section 170 of the Act is required.

13. It is also contended by the counsel for the

appellant that the testimony of two witnesses, Sh. Anil

Kumar and Sh. Vikram Singh clearly proved that

vehicle was being driven by Sanjeev and charge sheet

has been filed against him only. As per charge sheet,

he was not having any valid driving licence.

14. Thus on this basis, no liability can be fixed upon

the appellant.

15. Learned counsel for the appellant has relied upon

the decision of the Apex Court in National Insurance

Company Limited v. Swaran Singh and Others,

(2004) 3 SCC 297 in support of its contentions.

16. Before delving with the contentions of the

appellant counsel, it is relevant to reproduce herein

the relevant sections of the Act.

17. Section 3 of the Act reads as under;

"3. Necessity for driving licence.- (1) No person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorising him to drive the vehicle; and no person shall so drive a transport vehicle other than a motor cab or motor cycle hired for his own use or rented under any scheme

made under sub-section (2) of section 75 unless his driving licence specifically entitles him so to do. (2) The conditions subject to which sub-section (1) shall not apply to a person receiving instructions in driving a motor vehicle shall be such as may be prescribed by the Central Government."

18. Section 181 of the Act reads as under;

             "181.     Driving         vehicles         in
             contravention of         section 3         or
             section 4.-

Whoever drives a motor vehicle in contravention of section 3 or section 4 shall be punishable with imprisonment for a term which may extend to three months, or with fine which may extend to five hundred rupees, or with both."

19. Chapter XI of the Act, providing compulsory

insurance of vehicles against third party risks are 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.

20. Section 149 of the Act provides as follows;

"149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.-

(1) x x x

(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 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) x        x          x           x
                        (i)    x          x           x

(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 disqualifications;

(iii) x x x

21. In a plethora of cases, the Apex Court and various

High Courts have held that, if there is a condition in

the insurance policy that only a licensed driver is to

drive the vehicle, the insurance company would not be

liable in case there is a breach.

22. There could be no doubt that in order to escape

liability, not only it should be proved that the driver of

the vehicle was not having a licence at the time of the

accident, but also the insurance company should prove

that the driver was disqualified from holding or

obtaining a licence or never had any licence at all.

23. Merely alleging that on the date of the accident,

the driver did not have a licence, is not enough to hold

that the insurance company is not liable for claim. The

onus of proving that the driver of the vehicle never had

a licence or was disqualified from holding a licence is

on the insurance company.

24. It is only when the insured himself placed the

vehicle in charge of a person who does not hold a

driving licence then it can be said that he is guilty of

the breach of the promise that the vehicle will be

driven by a licenced driver. Unless the insured is at

fault and guilty of breach, the insurer cannot escape

from the obligation to indemnify the insured and

successfully contend that he is exonerated having

regard to the fact that the promisor committed a

breach of his promise. The burden is, therefore, upon

the insurer to establish that the owner of the vehicle is

guilty of willful breach of the condition embodied in

the policy.

25. The Apex Court in Narcinva V. Kamat and Anr.

v. Alfredo Antonia Doe Martins and Ors. [1985

ACJ 397], observed;

"When the Insurance Company complains of a breach of the term of contract, which would permit it to disown its liability under the contract of insurance, the burden is squarely on the Insurance Company to prove that the breach has been committed by the other party to the contract. The rest in such a situation would be 'who would fail, if no such evidence is led'. With this principle of law in view, the evidence has to be judged. Merely non-production of licence or non-

examination of the driver of the vehicle is not enough nor any adverse inference can be drawn against the person holding that because of non-

examination of the driver or non-

production of the licence, the burden is discharged by a mere question in cross examination nor the owner is under any obligation to furnish the evidence so as to enable the Insurance Company not to riggle out its liability under the contract of insurance."

26. When the Insurance Company takes the plea that

it is not liable to pay compensation or to idemnify the

insured as the driver was not holding a valid licence

for driving the vehicle on the date of the accident and

the vehicle was being driven in breach of the terms of

the policy, the Insurance Company has to discharge

the burden by placing legal and cogent evidence

before the Tribunal (see Narcinva V. Alfredo

(supra)) : and a Division Bench case of this Court in

Shajadibai v. Babookhan and Ors. Vol. (1) 1988

ACC 24).

27. In New India Assurance Co. Shimla v. Kamla

and Ors. AIR 2001 SC 1419, the question was

whether by virtue of Section 149(2)(a)(ii) of the Act, an

Insurance Company could avoid liability if it is proved

that the driving licence was fake. The Court

considered, in detail, Section 149 of the Act and

observed that:

"The insurer has to pay to third parties only on account of the fact that a policy of insurance has been issued in respect of the vehicle, but the insurer is entitled to recover any such sum from the insured, if the insurer were not otherwise liable to pay such sum to the insured by virtue of the conditions of the contract of insurance indicated by the policy."

28. In Sohan Lal Passi v. P. Sesh Reddy and Ors.

AIR 1996 SC 2627, the Apex Court has observed as

under:

".....On behalf of the insurance company, a stand was taken that when Section 96(2)(b)(ii) has provided that the insurer shall be entitled to defend the action on the ground that there has been breach of a specified condition to the policy i.e. the vehicle should not be driven by a person who is not duly licensed, then the insurance company cannot be held to be liable to indemnify the owner of the vehicle. In other words, once there has been a contravention of the condition prescribed in Sub-section (2)(b)(ii) of Section 96, the person insured shall not be entitled to the benefit of Sub- section (1) of Section 96. According to us, Section 96(2)(b)(ii) should not be interpreted in a technical manner. Sub-section (2) of Section 96 only enables the insurance company to defend itself in respect of the liability to pay compensation on any of the grounds mentioned in Sub-section (2) including that there has been a contravention of the condition excluding the vehicle being driven by any person who is not duly licensed. This bar on the face of it operates on the person insured. If the person who has got the vehicle insured has allowed the vehicle to be driven by a

person who is not duly licensed then only that clause shall be attracted. In a case where the person who has got insured the vehicle with the insurance company, has appointed a duly licensed driver and if the accident takes place when the vehicle is being driven by a person not duly licensed on the basis of the authority of the driver duly authorised to drive the vehicle whether the insurance company in that event shall be absolved from its liability? The expression 'breach' occurring in Section 96(2)(b) means infringement or violation of a promise or obligation. As such the insurance company will have to establish that the insured was guilty of an infringement or violation of a promise. The insurer has also to satisfy the Tribunal or the Court that such violation or infringement on the part of the insured was wilful. If the insured has taken all precautions by appointing a duly licensed driver to drive the vehicle in question and it has not been established that it was the insured who allowed the vehicle to be driven by a person not duly licensed, then the insurance company cannot repudiate its statutory liability under Sub-section (1) of Section 96. In the present case far from establishing that it was the appellant who had allowed Rajinder Pal Singh to drive the vehicle when the accident took place, there is not even any allegation that it was the appellant who was guilty of violation the condition that the vehicle shall not

be driven by a person not duly licensed. From the facts of the case, it appears that the appellant had done everything within his power inasmuch as he has engaged a licensed driver Gurbachan Singh and had placed the vehicle in his charge. While interpreting the contract of insurance, the tribunals and courts have to be conscious of the fact that right to claim compensation by heirs and legal representative of the victims of the accident is not defeated on technical grounds. Unless it is established on the material on record that it was the insured who had wilfully violated the condition of the policy by allowing a person not daily licensed to drive the vehicle when the accident took place, the insurer shall be deemed to be a judgment debtor in respect of the liability in view of Sub-section (1) of Section 96 of the Act. It need not be pointed out that the whole concept of getting the vehicle insured by an insurance company is to provide an easy mode of getting compensation by the claimants, otherwise in normal course they had to pursue their claim against the owner from one forum to the other and ultimately to execute the order of the Accident Claims Tribunal for realisation of such amount by sale of properties of the owner of the vehicle. The procedure and result of the execution of the decree is well known."

29. The Apex Court while discussing the question as

regards the liability of the owner vis-à-vis the driver

being not possessed of a valid licence has observed in

National Insurance Company Limited v. Swaran

Singh and Others (supra), as under ;

"In each case, on evidence led before the claim Tribunal, a decision has to be taken whether the fact of the driver possessing licence for one type of vehicle but found driving another type of vehicle, was the main or contributory cause of accident. If on facts, it is found that the accident was caused solely because of some other unforeseen or intervening causes like mechanical failures and similar other causes having no nexus with the driver not possessing requisite type of licence, the insurer will not be allowed to avoid its liability merely for technical breach of conditions concerning driving licence."

30. In Shri Deepak Kumar v. National Insurance

Co. Ltd., MAC APP No. 139/2007, decided on:

07.02.2008, this Court has observed as under;

"It is the settled legal position that it is for the insurer to produce evidence on record and to satisfy the Tribunal that there is a willful breach of the terms

and conditions of the policy by the insured. The Apex Court has already taken a view that mere absence, fake or invalid driving license or disqualification of the driver for driving the vehicle at the relevant time are not in themselves defenses available to the insurer against either the insured or the third parties and to avoid its liability towards the insured, the insurer has to prove on record that there was negligence on the part of the insured in fulfillling the terms and conditions of the policy and the insured has failed to exercise reasonable care in the matter of fulfillling such conditions. Merely because the driver was challaned under Sections 3/181 of the M.V. Act in itself would not be suffice to prove that the driver of the offending vehicle was not having a valid driving license. May be on the relevant date of the accident the driver might not have been found in possession of the license which could have invited his prosecution for violating Section 3/181 of M.V. Act but this does not necessarily lead to an inference that the driver was not having a valid driving license at all. The claimants in the compensation case did not implead the driver of the offending vehicle in the claim petition and in such circumstances it was the bounden duty of the insurer to have served a notice under Order 12 Rule 8 to summon the driving license from the driver or owner of the offending vehicle and

also could have taken steps to summon the driver as a witness in the case. The respondent insurer has failed to take any such steps. On the other hand, the appellant/owner had entered the witness box and has duly proved on record that he had taken adequate steps and reasonable care to verify the driving license of the driver before giving employment to the driver."

31. In the Trial Court, during the course of evidence,

Bharat Singh, the owner of the offending vehicle

appeared as R1W1 and stated that Vikram Singh was

working as a driver and Sanjeev was working as a

cleaner on the offending vehicle.

32. SI Anil Kumar, investigating officer appeared as

R3W2 and proved the certified copy of challan as

Ex.PA and deposed that Mohd.Abad was not a witness

and Vikram had no concern with this case.

33. Vikram Singh, who was examined as R3W3, had

deposed that on the day of accident he was not driving

the offending vehicle. He further deposed that no

criminal case has been filed against him.

34. As per findings of the Trial Court, the FIR

transpires the involvement of the alleged offending

vehicle and the factum of accident.

35. It was for the appellant to prove that the driver

did not possess valid driving licence at the time of

accident but apart from taking a plea in the written

statement, the appellant did nothing to substantiate

that the driver at the pertinent time was not having a

valid driving licence.

36. As per written statement of the appellant, the

insured has stated that Vikram Singh was the driver

who has valid and effective driving licence and as such

the appellant-Insurance company released the claim on

the basis of valid licence of Sh. Vikram Singh.

37. It is further the case of appellant that, during the

period of investigation, criminal record has been

obtained through investigator, Sh. Mohinder Kumar

Mittal and as per criminal record, Sh. Sanjeev,

respondent no.6 has been charge sheeted in the

criminal case who had no driving licence and Vikram

Singh was not driving the vehicle at the time of alleged

accident.

38. It is further the plea of appellant, that Sh. Bharat

Singh/Insured concealed the name of driver and

projected a false driver namely Vikram Singh, in order

to take the claim and throw liability of third party upon

the appellant.

39. All this plea taken up by the appellant by way of

preliminary objection in its written statement has not

been substantiated at all with any evidence before the

Trial Court.

40. As per statement of RW3W2, SI Anil Kumar, the

IO of the criminal case, the certified copy of the

challan indicate that it was filed against Sanjeev under

sections 279/304A/337 of IPC read with section 3/181

of the MV Act.

41. No evidence on record has been led on behalf of

the appellant to show as to whether Sanjeev was

convicted in that case u/s. 3/181 of the Motor Vehicles

Act or not. Merely filing of challan in a criminal court,

is not sufficient to absolve the appellant from its

liability, unless there is a finding by the Criminal Court

that the driver of offending vehicle was not having a

valid driving licence.

42. Interestingly, the appellant after the alleged

accident, when the insured submitted the claim form,

had admittedly released to the insured claim amount

on the basis of valid driving licence of Sh. Vikram

Singh. It appears that, later on, the criminal record

was obtained through investigator Sh. Mohinder

Kumar Mittal.

43. However, this investigator has not been examined

by the appellant. Thus, there is no evidence on record

to show that respondent no.6-Sanjeev was driving the

offending vehicle at the time of alleged accident nor

any evidence have been led on behalf of appellant to

prove that respondent no.6 Sanjeev, was not holding a

valid driving licence.

44. In the absence of any evidence to this effect on

record from the side of appellant, I do not find any

infirmity or illegality in the impugned judgment passed

by the Tribunal. The compensation awarded by the

Tribunal is just, fair and equitable.

45. Thus, the present appeal is not maintainable and

the same is hereby dismissed.

46. No order as to costs.

November 06, 2008 V.B.GUPTA, J.

rs