The New India Assurance Co. Ltd vs Dharmeshbhai Thakorbhai Patel
2021 Latest Caselaw 17937 Guj

     C/FA/852/2018                                             JUDGMENT DATED: 01/12/2021



     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
                      R/FIRST APPEAL NO.                852 of 2018

FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE VIPUL M. PANCHOLI   :    Sd/-
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1    Whether Reporters of Local Papers may be                                        NO
     allowed to see the judgment ?

2    To be referred to the Reporter or not ?                                         NO

3    Whether their Lordships wish to see the
     fair copy of the judgment ?                                                     NO

4    Whether this case involves a substantial
     question of law as to the interpretation
     of the Constitution of India or any                                             NO
     order made thereunder ?

=======================================================
            THE NEW INDIA ASSURANCE CO. LTD.
                         Versus
       DHARMESHBHAI THAKORBHAI PATEL & 4 other(s)
=======================================================
Appearance:
MR GC MAZMUDAR(1193) for the Appellant(s) No. 1
MR HG MAZMUDAR(1194) for the Appellant(s) No. 1
MR.HIREN M MODI(3732) for the Defendant(s) No. 1,2,3
NOTICE ISSUED BY PUBLICATION(77) for the Defendant Nos.4,5
=======================================================

    CORAM:HONOURABLE MR. JUSTICE VIPUL M. PANCHOLI

                                  Date : 01/12/2021
                                    ORAL JUDGMENT

1. This appeal is filed under Section 173 of the Motor Vehicle Act (hereinafter referred to as "the Act" for short) by the applicant - original opponent no.3 - Insurance Company, wherein the appellant has prayed that the judgment and award dated 23.11.2017 passed by the Motor Accident

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Claim Tribunal (Auxi.), Surat in MACP No.613/2005 be quashed and set aside.

2. The factual matrix of the present case is as under, 2.1 On 10.07.2005 at 16:15 hours, when the deceased was going as a pedestrian towards Bhestan station along with her brother and bhabhi and reached at the place of accident i.e. Udhana- Sachin Road, Nr. Dena Bank, Ramnagar Society, moje Bhastan, Surat, the opponent no.1 - driver of the Truck bearing Registration No.GJ-12-T-8844 came there in full speed, carelessly and in breach of the traffic rules and dashed with the deceased, Sunitaben causing accident. In the said accident, the deceased sustained fatal injuries, as a result of which, she died. The original claimants filed Claim Petition before the Tribunal, wherein the claimants prayed that the amount of Rs.5.00 lakhs by way of compensation be awarded to them. 2.2 The original opponents appeared before the Tribunal and the present applicant - opponent no.3 - Insurance Company filed written statement vide Exh.25 and denied its liability. Thereafter, the parties led evidence before the Tribunal.

2.3 After considering the evidence produced before the Tribunal, the Tribunal partly allowed the claim petition and thereby held all the opponents jointly and severely liable to pay compensation to the claimants. The

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Tribunal awarded Rs.4,50,800/- together with interest at the rate of 9% p.a. from the date of petition till realization of the amount with proportionate cost of the petition. The appellant - Insurance Company has, therefore, filed present Appeal.

3. Heard learned advocate, Mr. G.C. Majmudar for the appellant and learned advocate, Mr. Hiren Modi appearing for the opponent nos.1 to 3. The respondent nos.4 and 5, though served by way of substitute service, have not appeared either personally or through advocate.

4. Looking to the issue involved in the present appeal, learned advocates appearing for the parties have jointly requested that this appeal be disposed of at an admission stage.

5. Learned advocate for the appellant has mainly contended that the Tribunal has committed an error while not permitting the appellant - Insurance Company to recover the amount of compensation from the owner and driver of the vehicle in question. It is submitted that though the Tribunal has given finding that the driver of the insured truck was not holding valid and effective driving licence and committed breach of the terms and conditions of the policy, the Tribunal has held the appellant

- Insurance Company is liable to pay compensation. It is further submitted that the driver has produced fake driving licence before the police authority and the Insurance Company has proved its defence by producing letter of RTO at Exh.41. It is also contended that the Tribunal did not

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consider that the Insurance Company has produced copy of permit at Exh.38 and has also examined the RTO officer at Exh.37 and proved that at the time of accident, the insured vehicle was plying on the road without valid and effective permit and thereby proved its defence. Learned advocate has, therefore, urged that the appellant - Insurance Company be permitted to recover the amount from the driver and owner of the vehicle in question in accordance with law.

6. Learned advocate has placed reliance upon the order dated 07.04.2015 passed by the Division Bench of this Court in First Appeal No.20/2015 and submitted that in similar type of case, the Division Bench has partly allowed the appeal filed by the Insurance Company. It is, therefore, urged that this appeal be allowed.

7. On the other hand, learned advocate appearing for the respondent nos.1 to 3 - original claimants has submitted that no error is committed by the Tribunal while passing impugned award and, therefore, this Court may not interfere with the same. It is, however, submitted that if this Court is of the view that the original driver and owner of the vehicle in question are liable to pay compensation then, the appellant - Insurance Company be directed to pay amount of compensation to the respondents - original claimants and, thereafter, permit them to recover the same from the owner and driver of the vehicle in question.

8. I have considered the submissions canvassed by learned advocates appearing for the parties and I

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have also perused the material placed on record as well as the separate compilation provided by learned advocates.

9. In the present case, learned advocate appearing for the Insurance Company has mainly concentrated on the point of liability of the Insurance Company. This Court has considered the said aspect. From the record, it appears that the original opponent no.1 - driver of the offending vehicle was driving the vehicle in question with fake licence. The Tribunal has specifically observed that the opponent no.1 was holding driving licence, which was not issued by RTO, Uttar Pradesh as per the letter sent by RTO, directly to the Court, which is on record at Exh.41. The Tribunal has also observed that the opponent no.3 has filed an application to call a witness of RTO from where the licence for the opponent no.2 was issued so that the document was exhibited on record. The Tribunal has recorded the finding that the opponent no.1 was holding a fake licence at the time of accident. Thus from the aforesaid finding recorded by the Tribunal, it can be said that there was breach of the terms and conditions of the policy under Section 149(2)(a)

(ii) of the Act. However after having found by the Tribunal that the licence was fake and the Insurance Company is liable to pay amount to the third party, the Tribunal has failed to consider the aspect that the liberty should be made available to the Insurance Company to recover the amount from the insured even if such was the

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position.

10. At this stage, this Court would like to refer to the decision of the Hon'ble Supreme Court in case of National Insurance Company Ltd. Vs. Swaran Singh & Ors., reported in (2004) 3 SCC 297, wherein the Hon'ble Supreme Court has observed in Paragraph No.110 as under, "110.The summary of our findings to the various issues as raised in these petitions is as follows:

(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third party risks is 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.

(ii) An insurer is entitled to raise a defence in a claim petition filed under Section 163 A or Section 166 of the Motor Vehicles Act, 1988 inter alia in terms of Section 149(2)

(a)(ii) of the said Act.

(iii) The breach of policy condition e.g., disqualification of driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(ii) of section 149, has to be proved to have been committed by the insured for avoiding liability by the

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insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards 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.

(iv) The insurance companies, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish 'breach' on the part of the owner of the vehicle; the burden of proof wherefor would be on them.

(v) The court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance of each case.

(vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches

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on the condition of driving licence is/ are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply "the rule of main purpose" and the concept of "fundamental breach" to allow defences available to the insured under section 149(2) of the Act.

(vii) The question as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver, (a fake one or otherwise), does not fulfil the requirements of law or not will have to be determined in each case.

(viii) If a vehicle at the time of accident was driven by a person having a learner's licence, the insurance companies would be liable to satisfy the decree.

(ix) The claims tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third party arising in use of motor vehicle. The said power of the tribunal is not restricted to decide the claims inter se between claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defence or defences to the insurer, the Tribunal has necessarily the

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power and jurisdiction to decide disputes inter se between insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and the award made thereon is enforceable and executable in the same manner as provided in Section 174 of the Act for enforcement and execution of the award in favour of the claimants.

  (x)      Where on adjudication of the claim under
           the     Act    the        tribunal             arrives           at       a
           conclusion          that            the         insurer               has
           satisfactorily            proved          its        defence            in

accordance with the provisions of section 149(2) read with sub-section (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the tribunal. Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by

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sub-section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the tribunal.

(xi) The provisions contained in sub-section (4) with proviso thereunder and sub-section (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover amount paid under the contract of insurance on behalf of the insured can be taken recourse to by the Tribunal and be extended to claims and defences of insurer against insured by relegating them to the remedy before regular court in cases where on given facts and circumstances adjudication of their claims inter se might delay the adjudication of the claims of the victims."

11. The aforesaid shows that, as held by the Apex Court in the aforesaid decision, the Tribunal can enable the insurer to recover the amount from the insured unless the insured has proved otherwise for taking all reasonable care and cautions on his part. Mr. Modi, the learned counsel for the respondent Nos. 3 and 4, contended that in view of the observations made at para (iii) of para 110 of the aforesaid decision, the defence would be available to the insured to repudiate the liability. He submitted that there is no blanket proposition that if the licence is found to be fake, the insurance company shall be at the

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liberty to recover the amount from the owner of the vehicle i.e. insured.

12. As such, the interpretation, as put forward, cannot be accepted because the observations made in para (iii) of para 110 of the aforesaid decision are for enabling the insurance company to repudiate the liability if such is satisfactorily proved. At this stage, I may refer to the decision of the Apex Court in the case of Pepsu Road Transport Corporation Vs. National Insurance Company, reported in (2013) 10 SCC 217, wherein, the Apex Court, in paras 9 and 10 observed thus: "9. Swaran Singh case was subsequently considered by a two-Judge Bench of this Court in National Insurance Company Limited vs. Laxmi Narain Dhut. It was explained that: (Swaran Singh case, SCC p.

                 341 para 110)
                "110.     (iii)         ...         Mere         absence,           fake         or
                        invalid                 driving                licence                   or
                        disqualification                    of     the        driver          for
                        driving         at       the        relevant             time,        are
                        not       in     themselves defences 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

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was not disqualified to drive at the relevant time."

10. In a claim for compensation, it is certainly open to the insurer under Section 149(2)(a)(ii) to take a defence that the driver of the vehicle involved in the accident was not duly licensed. Once such a defence is taken, the onus is on the insurer. But even after it is proved that the licence possessed by the driver was a fake one, whether there is liability on the insurer is the 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 licence. 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 had 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 licence 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 licence duly verified from the licensing authority or if the attention of the owner of the vehicle is otherwise

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invited to the allegation that the licence 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 licence from the licensing authority. That is what is explained in Swaran Singhs case. If despite such information with the owner that the licence 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."

13. Thus keeping in view the aforesaid decisions rendered by the Hon'ble Supreme Court, if the facts of the present case are carefully seen, it is revealed that the respondent nos.4 and 5 herein i.e. the driver and owner of the vehicle in question have not entered into the witness box for showing the Tribunal that all care and caution were taken for verifying the genuineness of the licence or otherwise. Under these circumstances, the contention raised for availability of the defence even if accepted is on a non-existence premise because no evidence has been led on behalf of the owner of the vehicle in question for such purpose before the Tribunal. Thus, it was required for the Tribunal to enable the Insurance Company to recover the amount from the owner and driver of the vehicle in question in accordance with law after the payment is made to the original

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claimants as per the award. Therefore considering the facts of the present case, as discussed hereinabove, since the aforesaid aspect has not been expressly provided, the impugned award passed by the Tribunal deserves to be modified to that extent.

14. In view of the aforesaid observations and discussion, the present First Appeal stands allowed party. The impugned judgment and award dated 23.11.2017 passed by the Motor Accident Claim Tribunal (Auxi.), Surat in MACP No.613/2005 is hereby modified to the extent that after the payment of the amount as per the impugned judgment and award is made by the appellant - Insurance Company to the original claimants i.e. the respondent nos.1 to 3 herein, it would be open for the appellant - Insurance Company to recover the amount from the respondent nos.4 and 5 herein - driver and owner of the vehicle in question in accordance with law. No order as to costs.

Sd/-

(VIPUL M. PANCHOLI, J.) Gautam