Delhi High Court
Shashi Bhushan & Ors. vs National Insurance Co. Ltd. & Ors on 31 May, 2012
Author: G.P. Mittal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 28th May, 2012
Pronounced on: 31st May, 2012
+ MAC APP. 517/2007
SHASHI BHUSHAN & ORS. .... Appellants
Through: Mr.G.C. Mishra, Advocate
Versus
NATIONAL INSURANCE CO. LTD. & ORS .... Respondents
Through: Mr.Rohit Arora with
Ms.Neelam Singh, Advocates
for Respondent No.1 Insurance
Company
WITH
+ MAC.APP. 897/2011
RAJENDER KUMAR & ORS. ..... Appellants
Through None
versus
NATIONAL INSURANCE CO. LTD. & ORS ... Respondents
Through Mr. Rohit Arora with
Ms.Neelam Singh, Advocates
for Respondent No.1 Insurance
Company
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
JUDGMENT
G. P. MITTAL, J.
1. The Appellants impugn a judgment dated 17.05.2007 passed by
the Motor Accident Claims Tribunal (the Claims Tribunal)
whereby while awarding a compensation of `2,52,000/- in
favour of the Respondents No.2 and 3, the Respondent
No.1(National Insurance Co. Ltd.) was exonerated of the
liability to pay the compensation on the ground that there was a
willful and conscious breach of the terms of the policy.
2. The Appellants being owner of the offending vehicle (the
insured) and the driver of the offending vehicle challenge the
judgment on the ground that the negligence on the part of the
Second Appellant was not established; the compensation
awarded is excessive and that the Second Appellant had applied
for the grant of a transport licence before the date of the
accident; thus the First Appellant was not guilty of willful
breach of the terms of the policy and the Respondent No.1
Insurance Company was not entitled to be exonerated.
3. The Cross-Objections (registered as MAC. APP. No.897/2011)
have been preferred by the Respondents No.2 and 3 on the
ground that the compensation awarded is very low.
NEGLIGENCE:
4. On the issue of negligence, the Claims Tribunal held as under:
"6. To prove this issue petitioners examined Sh. Sultan
Singh as PW1 who deposed that on 21.4.05 at about
5 p.m. he was standing at the road side, Pandav
Nagar, Near Mother Dairy. A girl aged 6 years was
trying to cross the road. Tempo No.5462 having
Haryana number came from Laxmi Nagar side being
driven in a rash and negligent manner and hit
against the girl named Soni. Police took the girl to
GTB Hospital where in the evening she succumbed to
the injuries. R3 cross-examined this witness after
seeking permission u/s 170 of the M.V. Act. During
cross PW2 denied the suggestion that he was not
present at the spot and he is deposing false.
Petitioners has also relied upon certified copy of the
chargesheet Ex.P-16 against R1 u/s 279/304-A IPC
for this accident showing involvement of the
offending vehicle. Ex.P-7 is the P/M report of Soni
D/o Rajender, aged 6 years, wherein cause of death
is opined as crush injuries to abdomen and pelvis
produced by blunt force impact. The chargesheet
and P/M report supports statement of PW2.
7. The Ld. counsel for the R3 has contended that the
statement of PW1 and PW2 are in contradiction to
the record. The Ld. counsel pointed out that as per
PW2 deceased was taken to GTB Hospital whereas
postmortem was done at LBS Hospital. To this extent
I agree with the Ld. counsel for R3 that there is
contradiction regarding the name of the hospital in
the statement of PW2 vis-à-vis record. Merely on
this ground testimony of this witness cannot be
disbelieved. Moreover, respondents failed to lead
any evidence in rebuttal."
5. The Second Appellant did not enter the witness box to rebut
PW1's testimony. Moreover, his testimony is corroborated by
registration of a criminal case being FIR No.213, P.S. Pandav
Nagar. In a Claim Petition under Section 166 of the Motor
Vehicles Act, 1988(the Act), negligence is required to be
proved on the touchstone of preponderance of probability,
which to my mind has been done in the instant case. The
finding on negligence reached by the Claims Tribunal,
therefore, cannot be faulted.
QUANTUM OF COMPENSATION:
6. It is urged by the learned counsel for the Appellants that the
quantum of compensation is exorbitant and excessive. On the
other hand, the learned counsel for the Respondents No.2 and 3
relied on the judgment of this Court in R.K. Malik v. Kiran Pal,
III (2006) ACC 261, judgment of the Supreme Court in R.K.
Malik v. Kiran Pal, 2009 (8) Scale 451 and judgment of this
Court in National Insurance Company v. Farzana & Ors., 2009
ACJ 2763. In Farzana(supra), this court relied on the judgment
of the Supreme Court in Manju Devi v. Musafir Paswan, VII
(2005) SLT 257, Shyam Narayan v. Kitty Toors, IV (2005) ACC
1, and both the judgments of R.K. Malik (supra) and held that in
case of the death of a school going child, the parents would be
entitled to a compensation of `3,75,000/- (` 2,25,000/- towards
loss of dependency, `75,000/- towards non-pecuniary damages
and `75,000/- towards future prospects). In the circumstances,
the compensation of `2,52,000/- is liable to be enhanced to
`3,75,000/-.
7. Considering that the accident took place in the year 2007, the
grant of interest at the rate of 7% per annum seems to be
reasonable and does not call for any interference.
LIABILITY:
8. It is admitted case of the Appellants that the accident was
caused by a Tata Tempo No.HR-63-5462 and its gross weight
was 5700 Kg. Since it was a goods vehicle, it was a light motor
vehicle as also a transport vehicle. The Appellant No.2
possessed a driving licence to drive LMV(non-transport) for the
period 17.09.2002 to 04.07.2008. The endorsement to drive a
transport vehicle was made only w.e.f. 05.07.2005 to
04.07.2008. The accident took place on 21.04.2005. It is,
therefore, evident that the Second Appellant did not possess a
licence to drive a transport vehicle on the date of the accident.
9. In National Insurance Co. Ltd. v. Annappa Irappa Nesaria,
(2008) 3 SCC 464, His Lordship Mr. Justice S.B. Sinha (as he
then was) drew a distinction between the validity of a licence
for LMV, to drive a light goods carriage or a light passenger
vehicle before amendment in form 4 prescribed under Rule 2 (e)
in the Central Motor Vehicles Rules, 1989 (the Rules). Before
the amendment in 2001 the entries Medium Goods Vehicle and
Heavy Goods Vehicle existed which have been substituted by a
"transport vehicle". It was held that a person holding a licence
for Light Motor Vehicle after 28.03.2001 would not be
competent to drive a "transport vehicle". In the aforesaid case,
the accident occurred on 09.12.1999. It was in that context that
it was held that the driver by holding a valid licence for LMV
was authorized to drive a Light Goods Vehicle as well. In this
case, the accident took place on 21.04.2005 and thus the driver
who was holding a driving licence to drive a Light Motor
Vehicle was not competent to drive a transport vehicle. Paras
12 to 17 of the report are extracted hereunder:-
"12. The Central Government has framed Rules known
as The Central Motor Vehicles Rules, 1989.
13. The word "Form" has been defined in Rule 2(e) to
mean a Form appended to the rules.
"I Apply for a licence to enable me to drive vehicles of
the following description:
(d) Light motor vehicle
(e) Medium goods vehicle
(g) Heavy goods vehicle
(j) Motor vehicles of the following description:...."
After amendment the relevant portion of Form 4 reads as
under:
"I Apply for a licence to enable me to drive vehicles of
the following description:
(d) Light motor vehicle
(e) Transport vehicle
(j) Motor vehicles of the following description:...."
14. Rule 14 prescribes for filing of an application in
Form 4, for a licence to drive a motor vehicle,
categorizing the same in nine types of vehicles.
Clause (e) provides for "Transport vehicle" which has
been substituted by G.S.R. 221(E) with effect from
28.3.2001. Before the amendment in 2001, the entries
"medium good vehicle" and "heavy goods vehicle"
existed which have been substituted by "transport
vehicle". As noticed hereinbefore, "Light Motor Vehicles"
also found place therein.
15. "Light Motor Vehicle" is defined in Section 2(21)
and, therefore, in view of the provision, as then existed, it
included a light transport vehicle. Form 6 provides for
the manner in which the licence is to be granted, the
relevant portion whereof read as under:
"Authorisation to drive transport vehicle
Number.... Date....
Authorised to drive transport vehicle with effect
from.... Badge number....
Signature.... ...
Designation of the licensing authority Name and
designation of their authority who conducted the
driving test."
16. From what has been noticed hereinbefore, it is
evident that "transport vehicle" has now been substituted
for 'medium goods vehicle' and 'heavy goods vehicle'.
The light motor vehicle continued, at the relevant point of
time, to cover both, "light passenger carriage vehicle"
and "light goods carriage vehicle".
A driver who had a valid licence to drive a light motor
vehicle, therefore, was authorised to drive a light goods
vehicle as well.
17. The amendments carried out in the Rules having a
prospective operation, the licence held by the driver of
the vehicle in question cannot be said to be invalid in
law."
10. In National Insurance Co. v. Kusum Rai, (2006) 4 SCC 250 a
driver holding a driving licence to drive a Light Motor Vehicle
was held to be not entitled to drive a taxi.
11. Subsequently, in New India Assurance Company Limited v.
Roshanben Rahemansha Fakir & Anr., (2008) 8 SCC 253; the
Supreme Court differentiated between a transport vehicle and
non transport vehicle and held that a driver who had a valid
licence to drive a Light Motor Vehicle was not authorized to
drive a light goods vehicle. It was further held that the person
must possess the licence for the class of vehicle involved in the
accident.
12. The First Appellant being the owner and insured has not come
forward with an explanation as to the circumstances under
which the vehicle was entrusted to the Second Appellant who
did not possess a licence to drive a transport vehicle. Thus, the
First Appellant was guilty of willful violation of the terms of the
policy.
13. The Claims Tribunal therefore exonerated the Respondent
Insurance Company from its liability to pay the compensation
on the basis of a judgment of the Supreme Court in National
Insurance Company Limited v. Kusum Rai & Ors., (2006) 4
SCC 250.
14. The question of statutory liability to pay the compensation was
discussed in detail by a two Judge Bench of the Supreme Court
in Skandia Insurance Company Limited v. Kokilaben
Chandravadan, (1987) 2 SCC 654 where it was held that an
exclusion clause in the contract of Insurance must be read down
being in conflict with the main statutory provision enacted for
protection of victim of accidents. It was laid down that the
victim would be entitled to recover the compensation from the
insurer irrespective of the breach of the condition of policy. The
three Judge Bench of the Supreme Court in Sohan Lal Passi v.
P. Sesh Reddy, (1996) 5 SCC 21 analyzed the corresponding
provision under the Motor Vehicles Act, 1939 and the Motor
Vehicles Act, 1988 and approved the decision in Skandia
(supra). In New India Assurance Co., Shimla v. Kamla and
Ors., (2001) 4 SCC 342, the Supreme Court referred to the
decision of the two Judge Bench in Skandia(supra), the three
Judge Bench decision in Sohan Lal Passi(supra) and held that
the insurer who has been made liable to pay the compensation
to third parties on account of certificate of insurance issued,
shall be entitled to recover the same if there was any breach of
the policy condition on account of the vehicle being driven
without a valid driving licence. The relevant portion of the
report is extracted hereunder:
"21. A reading of the proviso to sub-section (4) as
well as the language employed in sub-section (5)
would indicate that they are intended to safeguard the
interest of an insurer who otherwise has no liability to
pay any amount to the insured but for the provisions
contained in Chapter XI of the Act. This means, the
insurer has to pay to the 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.
22. To repeat, the effect of the above provisions is
this: when a valid insurance policy has been issued in
respect of a vehicle as evidenced by a certificate of
insurance the burden is on the insurer to pay to the
third parties, whether or not there has been any breach
or violation of the policy conditions. But the amount
so paid by the insurer to third parties can be allowed
to be recovered from the insured if as per the policy
conditions the insurer had no liability to pay such sum
to the insured.
23. It is advantageous to refer to a two-Judge
Bench of this Court in Skandia Insurance Company
Limited v. Kokilaben Chandravadan, (1987) 2 SCC
654. Though the said decision related to the
corresponding provisions of the predecessor Act
(Motor Vehicles Act, 1939) the observations made in
the judgment are quite germane now as the
corresponding provisions are materially the same as in
the Act. Learned Judge pointed out that the insistence
of the legislature that a motor vehicle can be used in a
public place only if that vehicle is covered by a policy
of insurance is not for the purpose of promoting the
business of the insurance company but to protect the
members of the community who become suffers on
account of accidents arising from the use of motor
vehicles. It is pointed out in the decision that such
protection would have remained only a paper
protection if the compensation awarded by the courts
were not recoverable by the victims (or dependants of
the victims) of the accident. This is the raison d'etre
for the legislature making it prohibitory for motor
vehicles being used in public places without covering
third-party risks by a policy of insurance.
24. The principle laid down in the said decision has
been followed by a three-Judge Bench of this Court
with approval in Sohan Lal Passi v. P. Sesh Reddy,
(1996) 5 SCC 21.
25. The position can be summed up thus:
The insurer and the insured are bound by the
conditions enumerated in the policy and the insurer is
not liable to the insured if there is violation of any
policy condition. But the insurer who is made
statutorily liable to pay compensation to third parties
on account of the certificate of insurance issued shall
be entitled to recover from the insured the amount paid
to the third parties, if there was any breach of policy
conditions on account of the vehicle being driven
without a valid driving licence........."
15. Again in United India Insurance Company Ltd. v. Lehru &
Ors., (2003) 3 SCC 338, in para 18 of the report the Supreme
Court referred to the decision in Skandia(supra), Sohan Lal
Passi(supra) and Kamla(supra) and held that even where it is
proved that there was a conscious or willful breach as provided
under Section 149(2)(a) (ii) of the Motor Vehicle Act, the
Insurance Company would still remain liable to the innocent
third party but may recover the compensation paid from the
insured. The relevant portion of the report is extracted
hereunder:
"18. Now let us consider Section 149(2). Reliance has
been placed on Section 149(2)(a)(ii). As seen, in order to
avoid liability under this provision it must be shown that
there is a "breach". As held in Skandia and Sohan Lal
Passi cases the breach must be on the part of the
insured. We are in full agreement with that. To hold
otherwise would lead to absurd results. Just to take an
example, suppose a vehicle is stolen. Whilst it is being
driven by the thief there is an accident. The thief is
caught and it is ascertained that he had no licence. Can
the insurance company disown liability? The answer has
to be an emphatic "No". To hold otherwise would be to
negate the very purpose of compulsory insurance.........."
xxxx xxxx xxxx xxxx xxxx
xxxx xxxx xxxx xxxx xxxx
20...........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, Sohan Lal Passi and Kamla cases. We
are in full agreement with the views expressed therein
and see no reason to take a different view."
16. The three Judge Bench of the Supreme Court in National
Insurance Company Limited v. Swaran Singh & Ors., (2004) 3
SCC 297 again emphasized that the liability of the insurer to
satisfy the decree passed in favour of the third party was
statutory. It approved the decision in Sohan Lal Passi (supra),
Kamla (supra) and Lehru (supra). Para 73 and 105 of the report
are extracted hereunder:
"73. The liability of the insurer is a statutory one. The
liability of the insurer to satisfy the decree passed in
favour of a third party is also statutory.
xxxx xxxx xxxx xxxx xxxx
xxxx xxxx xxxx xxxx xxxx
105. Apart from the reasons stated hereinbefore, the
doctrine of stare decisis persuades us not to deviate from
the said principle."
17. This Court in MAC APP. No.329/2010 Oriental Insurance
Company Limited v. Rakesh Kumar and Others and other
Appeals decided by a common judgment dated 29.02.2012,
noticed some divergence of opinion in Malla Prakasarao v.
Malla Janaki & Ors.(2004) 3 SCC 343, National Insurance
Company Limited v. Kusum Rai & Ors., (2006) 4 SCC 250,
National Insurance Company Limited v. Vidhyadhar
Mahariwala & Ors., (2008) 12 SCC 701; Ishwar Chandra &
Ors. v. The Oriental Insurance Company Limited & Ors.,
(2007) 10 SCC 650 and Premkumari & Ors. v. Prahalad Dev &
Ors., (2008) 3 SCC 193 on the one hand and Sohan Lal Passi v.
P. Sesh Reddy, (1996) 5 SCC 21, New India Assurance Co.,
Shimla v. Kamla and Ors., (2001) 4 SCC 342, United India
Insurance Company Ltd. v. Lehru & Ors., (2003) 3 SCC 338,
National Insurance Company Limited v. Swaran Singh & Ors.,
(2004) 3 SCC 297, Oriental Insurance Co. Ltd. v. Zaharulnisha
and Ors., (2008) 12 SCC 385, National Insurance Company
Limited v. Geeta Bhat & Ors., 2008 (12) SCC 426, and National
Insurance Company Limited v. Laxmi Narain Dhut, (2007) 3
SCC 700; on the other hand and held that in view of the three
Judge Bench decision in Sohan Lal Passi(supra) and Swaran
Singh(supra), the liability of the Insurance Company vis-à-vis
the third party is statutory. If the Insurance Company
successfully proves the conscious breach of the terms of the
policy, it would be entitled to recovery rights against the owner
or driver, as the case may be.
18. In this view of the matter, the First Respondent Insurance
Company is under an obligation to discharge its statutory
liability to pay the compensation awarded along with interest to
the Respondents No.2 and 3. It shall be entitled to recover the
compensation without taking separate proceedings in execution
of this very judgment from the First Appellant (being the owner
and insured of the offending vehicle) and the Second Appellant
(being the principal tortfeasor).
19. The amount awarded(as per para 6 above) shall be equally
apportioned in favour of the Respondents No.2 and 3. This
accident took place in the year 2005. The amount of
compensation shall be deposited by the Respondent No.1
National Insurance Co. Ltd. with the UCO Bank, Delhi High
Court Branch in the name of the Respondents No.2 and 3 within
six weeks.
20. Both the Appeals are allowed in above terms.
21. The statutory amount of `25,000/- shall be refunded to the
Appellants in MAC. APP. No.517/2007.
(G.P. MITTAL)
JUDGE
MAY 31, 2012
pst
