Delhi High Court
Icici Lombard General Insurance ... vs Ram Jatan & Ors. on 11 May, 2016
$~5 & 6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 11th May, 2016
+ MAC.APP. 247/2013
ICICI LOMBARD GENERAL INSURANCE COMPANY LTD.
..... Appellant
Through: Ms. Neerja Sachdeva, Adv.
versus
RAM JATAN & ORS. ..... Respondents
Through: Mr. Sunil Kr. Ojha, Adv. with Mr.
Nishant Yadav, Authorized
Representative of R-2.
AND
+ MAC.APP. 249/2013
ICICI LOMBARD GENERAL INSURANCE COMPANY LTD.
..... Appellant
Through: Ms. Neerja Sachdeva, Adv.
versus
SHIVANI & ORS. ..... Respondents
Through: Mr. Sunil Kr. Ojha, Adv. with Mr.
Nishant Yadav, Authorized
Representative of R-2.
CORAM:
HON'BLE MR. JUSTICE R.K.GAUBA
JUDGMENT
R.K.GAUBA, J (ORAL):
1. On 04.02.2011, Ram Jatan Sahu and his wife Shivani suffered injuries
in a motor vehicular accident involving negligent driving of car bearing
registration no.DL-1RX-6861, plied as a taxi, and filed accident claim cases
in the wake of a detailed accident report (DAR) submitted by the police
which had registered first information report (FIR) no.33/2011 in local
police station, the cases having been registered as nos.82/DAR/2011 and
83/DAR/2011 respectively. In both the petitions, the appellant/insurance
company (the insurer) was impleaded as the third respondent, it having
concededly issued an insurance policy in respect of the said vehicle against
third party risk for the period in question in favour of M/s Carzonrent India
Pvt. Ltd. (third respondent in these appeals), the registered owner of the said
vehicle, in addition to Tajveer Singh (second respondent in these appeals) he
being the driver of the said vehicle at the relevant point of time, besides
Rajesh Kumar (fourth respondent in these appeals), he being lease-holder of
the vehicle being plied as a taxi under a radio-taxi operation agreement.
2. The insurer, while resisting the claim cases, had pleaded breach of
terms and conditions of the insurance policy on the ground that the driver
was not holding a valid or effective driving license. The owner of the
offending vehicle contested by submitting that it had been handed over on
lease to the fourth respondent after confirmation that he had a valid and
effective driving license and, therefore, due diligence had been exercised.
Against this backdrop, the insurer also took the plea that since the vehicle
had been given on lease, there was yet another violation of the terms of the
insurance policy for which reason the indemnity clause could not be
invoked.
3. The tribunal, by separate judgments, rendered on 09.10.2012, upheld
the cases of the claimants that the accident had occurred resulting in injuries
being sustained by each of them on account of negligence on the part of the
driver. It, however, rejected the contentions of the insurance company for
exonerations on the above grounds and directed it to pay the compensation
in each case.
4. By the appeals at hand, the insurer only reiterates its case of breach of
terms and conditions of the insurance policy and prays for recovery rights.
5. The facts and circumstances of both the cases are common and
reasons set out in each judgment for rejecting the contention of the insurance
company are identical. While rejecting the plea with regard to the driving
license, the tribunal referred to National Insurance Company v. Swaran
Singh, (2004) 3 SCC 297 and United India Insurance Company Ltd. v.
Lehru & Ors. (2003) 3 SCC 338 and held that since evidence clearly showed
that the owner had given the vehicle to the fourth respondent who was
holding a valid or effective driving license for commercial vehicle with
requisite endorsement, there was no case of willful or deliberate breach of
terms and conditions of the policy on this account.
6. This court finds the reasoning set out by the tribunal to be appropriate
in the light of the law laid down by the Supreme Court in the cases of
Swaran Singh (supra) and Lehru (supra).
7. The contention with regard to the breach on account of vehicle having
been handed over on lease to the fourth respondent was considered by the
tribunal after taking note of the evidence showing that the offending vehicle
had been registered as a radio-taxi under radio-taxi scheme of the transport
authority and the agreement with the fourth respondent had been entered
into under the said scheme. After analysing various terms and conditions of
the scheme and the radio-taxi agreement, the tribunal found that the control
over the vehicle had continued in the hands of the second respondent who
was thus liable to pay the compensation for the injuries suffered by the third
party and, consequently, the third respondent (the insurer) was bound to
indemnify.
8. In identical fact-situation, similar questions had been raised in another
appeal Meru Cab Company Ltd. vs. ICICI Lombard General Insurance Co.
Ltd. & Anr. (MAC appeal no.987/2014) decided by this court on 22.03.2016.
In that case, the tribunal had granted recovery rights to the insurer against
the owner of the taxi. This court considered relevant contention urged and
held as under:-
"4. The learned counsel for the insurer, while resisting the appeal,
inter alia, referred to the view taken by Supreme Court in Rajasthan
State Road Transport Corporation v. Kailash Nath Kothari (1997) 7
SCC 481 and National Insurance Company Ltd v. Deepa Devi (2008)
1 SCC 414. She referred to the second clause of proviso to Section
147(1) MV Act to contend that the third party insurance policy which
had been taken out by the appellant in respect of the offending vehicle
was not required to cover liability arising out of contractual law. She
referred in this context to the policy document, copy of which has
been submitted (at pages 74 to 84 of the paper book), particularly the
clause under the heading "general exceptions" which is akin to what
is provided in proviso to sub-section (1) of Section 147 MV Act.
5. The learned senior counsel for the appellant, on the other hand,
referred to Uttar Pradesh State Road Transport Corporation v.
Kulsum (2011) 8 SCC 142 and Managing Director, K.S.R.T.C. v. New
India Assurance Co. Ltd. (2016) 2 SCC 382, and argued that the third
party risk undertaken by the insurance company could not be avoided
on the plea accepted by the tribunal. It is pointed out that under the
insurance policy, the owner (appellant) is entitled to engage any
person as the driver subject, of course, to the condition that the
person so engaged must hold a valid driving licence and be not
disqualified from holding one at the time of the accident. It is pointed
out that the view taken in Kailash Nath Kothari (supra) was
distinguished by the Supreme Court in the case of Managing Director,
K.S.R.T.C. (supra).
6. In the considered opinion of this Court, the approach of the
tribunal was erroneous. There is no requirement either under the
scheme or under the insurance policy that there should be an
employer-employee relation between the driver and the owner of the
vehicle as seems to be the premise on which the tribunal took the
impugned view.
7. Pertinently, in Kulsum (supra), Supreme Court observed thus :
"31. The liability to pay compensation is based on
a statutory provision. Compulsory insurance of the
vehicle is meant for the benefit of the third parties. The
liability of the owner to have compulsory insurance is
only in regard to third party and not to the property.
Once the vehicle is insured, the owner as well as any
other person can use the vehicle with the consent of the
owner. Section 146 of the Act does not provide that any
person who uses the vehicle independently, a separate
insurance policy should be taken. The purpose of
compulsory insurance in the Act has been enacted with
an object to advance social justice."
8. In Managing Director, K.S.R.T.C. (supra), the following
observations of the Supreme Court in rejecting similar contention
raised by the insurer, albeit in different context, need to be quoted
with advantage:
"24. .... The provisions contained in the Act are clear.
No vehicle can be driven without insurance as provided in
Section 147 whereas Clause 14 of the lease agreement
between KSRTC and the owner clearly stipulates that it shall be
the liability of the owner to provide the comprehensive
insurance covers for all kinds of accidental risks to the
passengers, other persons/property. The provisions of the said
clause of the agreement are not shown to be opposed to any
provision in the Contract Act or any of the provisions contained
under the 1988 Act. Hiring of public service vehicles is not
prohibited under any of the provisions of the aforesaid laws. It
could not be said to be inconsistent user by KSRTC. The
agreement is not shown to be illegal in any manner whatsoever
nor shown to be opposed to the public policy.
25. The policy of insurance is contractual obligation
between the insured and the insurer. It has not been shown that
while entering into the aforesaid agreement of lease for hiring
the buses, any of the provisions contained in the insurance
policy has been violated. It has not been shown that the owner
could not have given bus on hire as per any provision of policy.
It was the liability of the registered owner to provide the bus
regularly, to employ a driver, to make the payment of salary to
the driver and the driver should be duly licensed and not
disqualified as provided in the agreement though buses were to
be plied on the routes as specified by KSRTC and hiring charges
were required to be paid to the registered owner. In the
absence of any stipulation prohibiting such an arrangement in
the insurance policy, we find that in view of the agreement of
lease the registered owner has owned the liability to pay. The
insurer cannot also escape the liability.
X X X
27. Now, we come to the question of exclusion of
contractual liability under the second proviso to Section
147(1). When we read the provisions of Section 147 with
Section 157 together, it leaves no room for any doubt that there
is deemed transfer of policy in case of transfer of vehicle.
Hence, liability of the insurer continues notwithstanding the
contract of transfer of vehicle, such contractual liability cannot
be said to be excluded by virtue of the second proviso to Section
147(1) of the 1988 Act. Hire-purchase agreement, an
agreement for lease or an agreement for hypothecation are
covered under Section 2(30) of the 1988 Act. A person in
possession is considered to be an owner of the vehicle under
such agreements. In case such contractual liability is excluded
then anomalous results would occur and financer under hire-
purchase agreement would be held liable and so on. In our
view, an agreement for lease on hire cannot be said to be
contract envisaged for exclusion under contractual liability in
the second proviso to Section 147(1) of the 1988 Act. The High
Court has erred in holding otherwise."
9. To borrow the expression used in the case of National
Insurance Company V. Swaran Singh (2004) 3 SCC 297, there is no
"fundamental breach" of the terms and conditions of the policy
shown in the case at hand. If there is any violation of the terms and
conditions of the Radio Taxi Scheme, it is for the authority which
granted licence under the said scheme to the appellant to take
appropriate action. The conclusion is that the insurance company
cannot escape its liability under the indemnity clause undertaken
under the insurance policy."
9. The above view squarely applies to the case at hand.
10. In the result, the appeals are found to be unmerited and, thus,
dismissed.
11. By identical order dated 15.03.2013 passed in both these appeals, the
insurance company had been directed to deposit the entire awarded amount
with up-to-date interest with the Registrar General within the period
specified whereupon 50% was allowed to be released to the claimants in
each case, the balance to be kept in fixed deposit with UCO Bank, Delhi
High Court branch, New Delhi, initially for a period of one year to be
renewed from time to time. The balance lying in deposit now shall also be
released to the claimants in terms of the impugned awards.
12. The statutory amount, if deposited, shall be refunded.
R.K. GAUBA
(JUDGE)
MAY 11, 2016
ssc
