Delhi High Court
Delhi Transport Corporation vs United India Insurance Company ... on 16 May, 2017
$~6-12 & 18-20
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 16.05.2017
+ MAC.APP. 1081/2016
DELHI TRANSPORT CORPORATION ..... Appellant
Through: Mr. Sarfaraz Khan, Adv.
versus
UNITED INDIA INSURANCE COMPANY
LIMITED & ORS ..... Respondents
Through: Ms. Neerja Sachdeva, Adv. for R-1.
+ MAC.APP. 1088/2016 & CM No. 47468/2016
DELHI TRANSPORT CORPORATION ..... Appellant
Through: Mr. Sarfaraz Khan, Adv.
versus
UNITED INDIA INSURANCE COMPANY
LIMITED & ORS ..... Respondents
Through: Ms. Neerja Sachdeva, Adv. for R-1.
+ MAC.APP. 1089/2016 & CM No. 47471/2016
DELHI TRANSPORT CORPORATION ..... Appellant
Through: Mr. Sarfaraz Khan, Adv.
versus
UNITED INDIA INSURANCE COMPANY
LIMITED & ORS ..... Respondents
Through: Ms. Neerja Sachdeva, Adv. for R-1.
+ MAC.APP. 1091/2016 & CM No. 47566/2016
MAC.APP. 1081/2016 & connected matters Page 1 of 13
DELHI TRANSPORT CORPORATION ..... Appellant
Through: Mr. Sarfaraz Khan, Adv.
versus
UNITED INDIA INSURANCE COMPANY
LIMITED & ORS ..... Respondents
Through: Ms. Neerja Sachdeva, Adv. for R-1.
+ MAC.APP. 1092/2016 & CM No. 47573/2016
DELHI TRANSPORT CORPORATION ..... Appellant
Through: Mr. Sarfaraz Khan, Adv.
versus
UNITED INDIA INSURANCE COMPANY
LIMITED & ORS ..... Respondents
Through: Ms. Neerja Sachdeva, Adv. for R-1.
+ MAC.APP. 1093/2016 & CM No. 47579/2016
DELHI TRANSPORT CORPORATION ..... Appellant
Through: Mr. Sarfaraz Khan, Adv.
versus
UNITED INDIA INSURANCE COMPANY
LIMITED & ORS ..... Respondents
Through: Ms. Neerja Sachdeva, Adv. for R-1.
+ MAC.APP. 1094/2016 & CM No. 47591/2016
DELHI TRANSPORT CORPORATION ..... Appellant
Through: Mr. Sarfaraz Khan, Adv.
versus
UNITED INDIA INSURANCE COMPANY
LIMITED & ORS ..... Respondents
MAC.APP. 1081/2016 & connected matters Page 2 of 13
Through: Ms. Neerja Sachdeva, Adv. for R-1.
+ MAC.APP. 313/2016
DELHI TRANSPORT CORPORATION ..... Appellant
Through: Mr. Sarfaraz Khan, Adv.
versus
RAJENDER AWASTHI & ORS (UNITED INDIA
INSURANCE CO LTD) ..... Respondent
Through: Mr. Pankaj Seth, Adv. for R-1.
+ MAC.APP. 1022/2016
DELHI TANSPORT CORPORATION ..... Appellant
Through: Mr. Sarfaraz Khan, Adv.
versus
UNITED INDIA INSURANCE CO LTD & ORS ..... Respondents
Through: Mr. Vijay Singh, Adv. for R-1.
+ MAC.APP. 194/2017
DELHI TRANSPORT CORPORATION ..... Appellant
Through: Mr. Sarfaraz Khan, Adv.
versus
NATIONAL INSURANCE CO LTD & ORS ..... Respondents
Through: Mr. Pankaj Seth, Adv. for R-1.
CORAM:
HON'BLE MR. JUSTICE NAJMI WAZIRI
NAJMI WAZIRI, J (Oral)
1. These Appeals impugn the right of recovery granted to the insurer
against the appellant. The third party liability has been met by the insurer
MAC.APP. 1081/2016 & connected matters Page 3 of 13
but they seek to recover the compensation amount from the owner of the
vehicle for breach of policy conditions. The issue involved in the present
cases is whether the liability to pay compensation can be fixed on the
appellant, whose bus was being driven by a driver who did not possess a
valid Driving License (DL).
2. The learned counsel for the appellant contends that it is not for the
employer of the vehicle to verify the genuineness of the driving license. He
relies upon the judgment of United India Insurance Company Ltd. vs
Lehru & Ors. JT 2003 (2) SC 595 which, inter alia, held:
".... 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 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,
there is an accident. The thief is caught and it is
ascertained that he had no license. 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. The injured or
relatives of the 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 insurance. In all businesses,
there is an element of risk. All persons carrying on
business must take risks associated with that business.
MAC.APP. 1081/2016 & connected matters Page 4 of 13
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."
....
"20. When an owner is hiring a driver, he will therefore
have to check whether the driver has a driving license. If
the driver produces, a driving license which on the face of
it looks genuine, the owner is not expected to find out
whether the license has in fact been issued by a competent
authority or not. The owner would then take the test of the
driver. If he finds 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 RTOs, which are spread all over the country, whether
the driving license shown to them is valid or not. Thus,
where the owner has satisfied himself that the driver has a
license. And is driving competently, there would be no
breach of Section 149(2)(a)(ii). The insurance company
would not then be absolved of liability. If it ultimately
turns out that the license was fake, the insurance company
would continue to remain liable unless they prove that the
owner/insured was aware or had noticed that the license
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...."
3. He also relies on the judgment in Pepsu Road Transport Corporation
vs. National Insurance Company (2013) 10 SCC 217 which too dealt with
genuineness of the driving license. The Supreme Court had noted that even
after perusing the evidence tendered by the Licensing Authority, it could not
be conclusively ascertained whether the driving license was genuine or not;
the Register maintained for issuing the driving licenses showed certain
entries of 1985; the license concerned bore a number that was not included
in the Register. The evidence also stated that it was possible that the other
license Registers maintained in the year 1985, which were not readily
available, may have contained the details of the license concerned. In other
words, the element of doubt weighed in favour of the validity of the license.
4. The appellant contends that the insurer has failed to prove that the
driving license was fake; furthermore the insurer had not taken any such
defense in the common written statement. The learned counsel also relies
upon the decision of this Court dated 12.03.2012 in MAC. App No. 16/2009,
Delhi Transport Corporation vs. Shobha Rani & Ors., wherein DTC's
appeal had been allowed on the ground that during cross examination the
insurer had not put any suggestion to the driver that the license was fake and
more importantly, that the driver or owner was aware that his license was
fake; since neither the insurer nor the investigating police officer doubted
the veracity of the license at least from merely looking at it, the insurer had
failed to discharge the onus of proving willful breach of a condition in the
insurance policy.
5. However, the aforesaid case is distinguishable on facts because in the
present case, the Investigating Officer had said in his report that the driving
licence of the driver of the offending vehicle was fake. This position was
not controverted by the appellant through evidence.
6. The appellant also relied upon a judgment of this Court in M/s.
United India Insurance Co. Ltd. vs Babita Bai & Ors. in MAC. App.
301/2012, decided on 29.10.2014 which held that the DTC was not expected
to verify the genuineness of the driving license from the issuing authority at
the time of employment of driver; it was sufficient if at the time of hiring the
driver, the DTC checked the driving license; DTC cannot be held liable if
later the driving license was found to be fake or invalid. This argument was,
however, rejected by the Tribunal on the ground that DTC, being a statutory
body, had a bigger onus on it as an owner to verify the validity of the driving
license before employing the selected persons as drivers.
7. Refuting the aforesaid contention the learned counsel for the insurer
submits that when the Detailed Action Report (DAR) filed by the
investigating police officer concluded that the driving licence was fake;
nothing further was required to be done by the insurer, it was for the
employer/owner of the vehicle to prove that the licence was otherwise valid.
The insurer argues that the motor insurance policy was issued in good faith
under the bona fide presumption that the driver of the insured motor vehicle
would be a person who would be duly licensed to drive. It is argued that this
assumption is in consonance with the principle laid down in National
Insurance Co.Ltd. vs Swaran Singh & Ors. AIR 2004 SC 1531, wherein it
was held that:
"110. (iii)... 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 fulfilling the condition of
the policy regarding use of vehicles by duly licensed driver
or one who was not disqualified to drive at the relevant
time..."
8. The insurer led evidence through its officers to state that there was
breach of the insurance policy i.e., the driver did not possess a valid driving
license, hence it would be entitled to recovery rights.
9. In Pepsu (supra), the Supreme Court observed:
"10. In a claim for compensation, it is certainly open to the
insurer under Section 149(2)(a)(ii) to take a defense that the
driver of the vehicle involved in the accident was not duly
licensed. Once such a defense is taken, the onus is on the
insurer. But even after it is proved, that the license
possessed by the driver is a fake one, whether there is
liability on the insurer is a moot question. As far as the
owner of the vehicle is concerned, when he hires a driver,
he has to check whether the driver has a valid driving
license. Thereafter he has to satisfy himself as to the
competence of the driver. If satisfied in that regard also, it
can be said that the owner has taken reasonable care in
employing a person who is qualified and competent to drive
the vehicle. The owner cannot be expected to go beyond
that, to the extent of verifying the genuineness of the driving
license with the Licensing Authority before hiring the
services of the driver. However, the situation would be
different if at the time of insurance of the vehicle or
thereafter, the insurance company requires the owner of the
vehicle to have the license duly verified from the Licensing
Authority or if the attention of the owner of the vehicle is
otherwise invited to the allegation that the license issued to
the driver employed by him is a fake one and yet the owner
does not take appropriate action for verification of the
matter regarding the genuineness of the license from the
Licensing Authority. That is what is explained in Swaran
Singh Case (Supra). If despite such information with the
owner that the license possessed by his driver is fake, no
action is taken by the insured for appropriate verification,
then the insured will be at fault and, in such circumstances,
the insurance company is not liable for the compensation."
10. The learned counsel for the appellant contends that the
engagement/employment of the driver was after: (i) production of the
driving license by him, (ii) his passing the driving test, and (iii) after
successfully completing the training provided to the prospective drivers.
However, Mr. Pankaj Seth, the learned counsel for the insurer stated that this
contention is not borne out from the appellant's written statement in which it
has defended each of the drivers, but neither the appellant nor the drivers led
any evidence to prove that they had a valid driving license. He contends that
it is evident that the employer/owner/DTC of the vehicle has clearly failed in
its duty to exercise reasonable care apropos use of the public transport bus
for ferrying ordinary unsuspecting passengers who board it with the
bonafide belief that its driver is duly licensed and has undergone requisite
training and has the competence to drive a public bus on the roads of Delhi.
The Tribunal has further observed that it is expected from a public employer
such as the appellant DTC, being a statutory undertaking, that it would
exercise due caution and care apropos verification of documents submitted
by a person who is offered employment. It could have verified the Driving
License even after giving the employment to drivers who may have passed
the driving test.
11. What emerges from the preceding discussion is that, before
employing a person as a driver the owner of an insured motor vehicle is
required to satisfy himself that the person is qualified and competent to drive
the vehicle and possesses a valid driving license. The owner may, as a
matter of caution and prudence, seek to discreetly verify the genuineness of
the driving license but that is not a mandatory requirement for a private
employer. Swaran Singh (supra) held that the issue whether the insured has
taken reasonable care to ascertain the validity of the driving licence
produced by the driver and whether it fulfills the requirement of law, will
have to be determined according to the facts in each case. In Pepsu (supra)
the Court held that where the owner is satisfied himself that the driver has a
license and was able to drive competently, it would not be a breach of the
policy conditions to as to accord a ground to the insurer to repudiate third
party liability.
12. The Tribunal had relied upon the observations in Pepsu (supra) that
the question of liability of an owner would have to be determined in the
facts of the each case. It also relied upon the judgment in National
Insurance Co .Ltd. vs Kusum Rai & Ors. (2006) 4 SCC 250 to say that the
owner of the vehicle cannot contend that he had no liability to verify the
facts as to whether the driver of the vehicle possessed a valid DL or not.
13. An insurance contract is based on uberrimae fides i.e. utmost good
faith. When an insurer extends an insurance cover, it is done in the belief
that the insured would take all necessary precautions and act as a reasonable
person. The appellant is a statutory authority. It is statutorily mandated to
provide public transport facility in the National Capital Territory of Delhi. It
is expected from a public employer to check the antecedents of its
prospective employees and in particular the fact that the candidate possessed
a valid driving license and that only after passing the special training, the
selected candidates would be offered employment. In employment of drivers
by a Government undertaking, the basic qualification is the possession of the
driving license. The exercise of checking the validity of the driving license
could be carried out even after offering provisional employment to the
successful candidates. The position of a public transport undertaking, or a
large public transporter, who engage a number of drivers - in hundreds and
thousands, to drive their fleet of vehicles, is different from a private
individual who engages one or two drivers for his/ her personal service. The
latter would not possess the necessary administrative or financial
wherewithal to verify the driving license. The individual may perhaps be
also constrained by exigencies to employ a driver immediately without
awaiting a driving licence verification report. In Lehru (supra), the Court's
concern that the objective of the legislation being that innocent third parties
should be compensated, hence, it held that even in instances where the
driving licence was fake, the insurer would remain liable to the innocent
third party so that stipulations in sections 146, 147 and 149 of the Act are
fulfilled and the award of compensation does not remain a hollow promise.
In the present case, the third party liability has been met by the insurer,
hence, the objective of the legislation apropos the innocent third party stands
fulfilled. However, the Court went on to hold that after paying
compensation to the third party, the insurer 'may be able to recover from the
insured'.
14. In this regard, what needs to be examined is whether the appellant
failed to exercise reasonable care as was expected from it. Regarding the
apportionment of liability, the impugned award records: ".... The
Respondents No. 1 & 2 have not led any evidence to prove that the
Respondent No. 2 while employing Respondents No. 1 has taken/ done
necessary test/ verification w.r.t. the capability of the Respondent No. 1 to
driver (sic) the vehicle as well as the genuineness of his DL and as such the
Respondent No. 2 cannot be absolved of its liability....". Clearly the
appellant/ DTC did not lead any evidence to prove that before employing the
drivers, it had taken the necessary driving test with respect to the capability
and competence of the drivers or about the genuineness of their driving
licence, therefore, the DTC cannot absolve itself of its liability. If the
appellant had actually conducted the necessary test of the driving
competence of the prospective candidates, and the necessary training having
undergone by them to drive the public buses, it should have led evidence in
this regard. The appellant insisted that the drivers had undergone the
necessary special training before they were employed. In the absence of
any evidence, it is clear that the appellant DTC failed to exercise reasonable
care before employing the drivers. Responsible governance and prudence
also require that special training be imparted to drivers, who ferry
commuters throughout the National Capital Territory of Delhi, especially in
view of the public transport needs of an ever burgeoning population and the
incessant increase in the number of vehicles on the city roads. The
numerous instances of rash and negligent driving involving DTC buses
resulting in severe injuries and deaths in Delhi in the period concerned
cannot be lost sight of. Even today, the strain of this malaise subsists. A
public transport undertaking is not expected to unleash untrained,
incompetent and unlicenced drivers upon the unsuspecting innocent public.
Therefore, this case fits into the exception as envisaged in Swaran Singh
(supra) as referred to in Pepsu (supra) and Kusum Rai & Ors (supra).
15. In view of the above, there is no reason to interfere with the impugned
order. The appeals are without merit and are accordingly dismissed.
NAJMI WAZIRI, J
MAY 16, 2017/kk
