The Oriental Insurance Co. Ltd. vs Sudhama Prasad & Ors.
2012 Latest Caselaw 2962 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

                     +    MAC.APP.No.50/2005

        %                          Reserve on : 2nd May, 2012
                                  Date of decision : 4th May, 2012


      The ORIENTAL INSURANCE CO. LTD.         ..... Appellant
                     Through : Ms. Sakshi Gupta, Adv.

                     versus

      SUDHAMA PRASAD & ORS.             ..... Respondents
                  Through : Mr. H.S. Kanwar, Adv.

CORAM :-
THE HON'BLE MR. JUSTICE J.R. MIDHA

                              JUDGMENT

1. The appellant has challenged the award of the Claims

Tribunal whereby compensation of `3,08,436/- has been

awarded to the claimants.

2. The accident dated 15th August, 1999 resulted in injuries

to Sudhama Prasad who filed the claim petition before the

Claims Tribunal. The Claims Tribunal awarded `3,08,436/- to

the injured. There is no dispute with respect to the quantum of

compensation awarded to the claimants. The only ground

urged by learned counsel for the appellant at the time of

hearing of this appeal is that the driving licence of respondent

No.2 was found to be fake and, therefore, the appellant is

entitled to recovery rights against the driver and owner of the

offending vehicle.

3. The learned counsel submits that the appellant examined

the officer from the Motor Licencing Office, Meerut as RW-1/3

who produced the record relating to the driving licence of

respondent No.2 and deposed that no licence was issued to

respondent No.2 and the alleged driving licence Mark-A was

fake. The officer of the Insurance Company appeared in the

witness box as RW2/3 and proved the insurance policy as

Ex.RW2/A.

4. The Claims Tribunal rejected the prayer of the appellant

for recovery rights on the ground that the appellant has not

proved that the breach on the part of the insured was willful.

The Claims Tribunal referred to and relied upon the judgments

of the Supreme Court in National Insurance Co. Ltd. v.

Swaran Singh, 109 (2004) DLT 304 (SC) and United India

Insurance Co. Ltd. v. Lehru, 2003 ACJ 611. The findings of

the Claims Tribunal in this regard are reproduced hereunder:-

"Respondent nos.12 & 13 are jointly and severally liable to pay the compensation. However, respondent no.3 has taken a plea that respondent no.1 was not holding a valid and effective driving licence. I have also held that respondent no.1 was not holding a valid and effective driving licence. However, Insurance company cannot be absolved of its liability simple by providing that respondent no.1 was not holding a valid and effective driving licence at the time of accident. Recently in National Insurance Company Limited Vs. Swaran Singh & Others 109 (2004) Delhi Law Times 304 (SC) it was held that :

"Mere breach of condition of policy shall not absolved the Insurance Company from its liability unless and until it is proved that the breach was willful on the part of the insured.

It was further held that the burden of proof of breach would always be upon the Insurance Company. However, the Apex Court did not laid down any criteria as to how said burden would be discharged and held that the same would depend upon the facts of the case."

In United India Insurance Co. Ltd. V. Lehru and Others, 2003 ACJ 611 that:-

20. When an owner is hiring a driver he will therefore have to check whether the driver was 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 should then take the test of the driver. If he find 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 above 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 notice 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 Skiandia'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.

It was further held that :

"The injured or relatives of person killed in the accident may find that the decree obtained by them is only a paper decree as the owner is a man of straw. The owner himself would be an innocent sufferer. It is for this reason that the Legislature, in its wisdom, has made insurance, at least third party insurance, compulsory. The aim and purpose being that an Insurance Company would be available to pay. The business of the Company is to insurance. In all businesses there is an element of risk. All persons carrying on business must take risks associated with that business. Thus it is equitable that the business which is run for making profits also bears the risk associated with it. At the same time innocent parties must not be made to suffer or loss. These provisions meet these requirements. We are thus in agreement with what is laid down in aforementioned cases viz that in order to avoid liability it is not sufficient to show that the person driving at the time of accident was not duly licensed. The Insurance Company must establish that the breach was on the part of the insured."

Thus, the abovesaid observations made by the Apex Court makes it clear that in order to discharge the Insurance Company from its liability it has also to prove that insured has committed willful breach of the terms and conditions of the policy.

The Insurance Company has not lead any evidence so as to prove that insured had committed willful breach of the terms and conditions of the policy. Thus Insurance Company is liable to pay the compensation."

5. This case is squarely covered by the judgments of the

Supreme Court in National Insurance Co. Ltd. v. Swaran

Singh (supra) and United India Insurance Co. Ltd. v.

Lehru (supra) followed by the Claims Tribunal. The appellant

is not entitled to the recovery rights as it has failed to prove

that the insured has committed the willful breach of the terms

and conditions of the policy.

6. There is no merit in the appeal which is hereby

dismissed.

J.R. MIDHA, J MAY 04, 2012