Reliance General Insurance Co Ltd vs Madhuben Dineshbhai Prajapati
2021 Latest Caselaw 16452 Guj

     C/FA/2364/2020                              ORDER DATED: 21/10/2021




           IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                 R/FIRST APPEAL NO. 2364 of 2020
                               With
           CIVIL APPLICATION (FOR STAY) NO. 1 of 2020
                                 In
                 R/FIRST APPEAL NO. 2364 of 2020
                               With
CIVIL APPLICATION (FOR WITHDRAWAL/DISBURSEMENT OF AMOUNT)
                           NO. 1 of 2021
                                 In
                 R/FIRST APPEAL NO. 2364 of 2020
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                  RELIANCE GENERAL INSURANCE CO LTD
                                Versus
                    MADHUBEN DINESHBHAI PRAJAPATI
==========================================================
Appearance:
MR RATHIN P RAVAL(5013) for the Appellant(s) No. 1
NISHIT A BHALODI(9597) for the Defendant(s) No. 1,2,3
RULE SERVED(64) for the Defendant(s) No. 4,5
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 CORAM:HONOURABLE MR. JUSTICE A.G.URAIZEE

                           Date : 21/10/2021

                             ORAL ORDER

1. The appellant insurance company has preferred present appeal under Section 173 of the Motor Vehicles Act 1988 ("M.V. Act" for short) to question its liability to pay compensation under judgment and award dated 23.12.2019 passed by learned Motor Accident Claims Tribunal (Main) at Gandhinagar in M.A.C.P. No. 124 of 2016.

2. I have heard Mr. Raval, learned advocate for the appellant. There is no appearance on behalf of the respondents, though served with the notice of admission

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issued by this Court.

3. Mr. Raval, learned advocate for the appellant submits that the Tribunal has committed error in fastening liability of payment of compensation on the appellant insurance company, as the driver of the offending vehicle was holding the license to drive the non- transport vehicle, whereas the offending vehicle was Eicher Truck i.e. transport vehicle. It is his further submission that the appellant has produced various documents along with written statement Exh.17 to prove the defence of invalid driving license. He, therefore, submits that the tribunal has committed error in fastening liability of payment of compensation on the appellant insurance company relying on the decision of the Supreme Court in case of Mukund Dewangan vs. Oriental Insurance Co. reported in 2017 ACJ 2011 SC. He, therefore, submits that the appellant insurance company needs to be exonerated from its liability to pay compensation and ought to have directed the insurance company to pay the compensation to the claimants in the first instance and thereafter to recover the same from the owner of the offending vehicle in view of the decision of this Court in case of National Insurance Co. Ltd. vs. Nareshkumar Javsing Bamaniya and other reported in 2021 ACJ 995.

4. It emerges from the impugned judgment and award

C/FA/2364/2020 ORDER DATED: 21/10/2021

that it was argued on behalf of the appellant insurance company that the insurance company cannot be held liable to pay the amount of compensation on behalf of the owner of the vehicle, as the driver of the vehicle did not possess in fact even valid driving license to drive offending vehicle. The tribunal after examining the evidence on record has found that it is not in dispute that the driver of the offending vehicle was possessing license to drive non transport vehicle.

5. The only issue raised by the insurance company is that there is no endorsement upon the license by the authority that the license is valid to drive commercial vehicle. However, tribunal has fasten the liability of payment of amount of compensation on the insurance company in view of the decisions in case of National Insurance Co. vs. Swaran Singh reported in AIR 2004 SC 153 and in case of Mukund Dewangan (supra).

6. Mr. Raval, learned advocate for the appellant has placed reliance on the decision of this Court in case of National Insurance Co. Ltd vs. Nareshkumar Javsing Bamaniya (supra) wherein this Court has after considering various decisions of the Supreme Court has held that:-

"6.2 Now, in Swaran Singh (supra), the

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supreme court summarized its findings as under to propound the principle of pay and recover.

"(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) 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, have to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the

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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 are, 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

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drive during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches 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

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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 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

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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 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 of 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

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adjudication of the claims of the victims."

6.3 In Vinod Kumar Lamba (supra), by relying on Swaran Singh (supra), the Apex Court stated as under:

"(15) In the present case, the owner of the vehicle respondent No.1 had produced the insurance certificate indicating that vehicle No. DIL- 5955 was comprehensively insured by the respondent No.2 Insurance Company for unlimited liability. Applying the dictum in the case of National Insurance Company Ltd.,2004 ACJ 1 (SC), to subserve the ends of justice, the insurer respondent No.2 shall pay the claim amount awarded by the Tribunal to the appellants in the first instance, with liberty to recover the same from the owner of the vehicle, respondent No.1 in accordance with law." (Para-19)"

7. It is thus eminently clear that though the tribunal has recorded finding on the basis of documentary evidence obtainable on the record of the claim petition that the driver of the offending vehicle was not holding valid and effective driving license to drive any transport vehicle, it has fallen in error in fastening liability of payment of compensation on the appellant insurance company on the basis of decision of the Supreme Court in

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case of Mukund Dewangan (supra). The tribunal, therefore, ought to have exonerated the insurance company with direction to pay compensation to the claimants in first instance and to recover the same from the owner of the offending vehicle.

8. I am therefore of the view that the impugned judgment and award needs to be modified to the limited extent of exonerating the insurance company from its liability with direction to make payment to the claimants in first instance and then to recover the same from the owner of the offending vehicle

9. For the foregoing reasons present First Appeal is partly allowed. The judgment and award dated 23.12.2019 passed by Motor Accident Claims tribunal (Main) at Gandhinagar in MACP No. 124 of 2016 is hereby modified and the appellant insurance company is hereby exonerated from its liability. However, the appellant insurance company is directed to pay the compensation to the claimants in the first instance and to recover the same from the owner of the offending vehicle by taking out appropriate proceedings in accordance with law.

10. The First Appeal stands disposed of accordingly.

C/FA/2364/2020 ORDER DATED: 21/10/2021

ORDER IN CIVIL APPLICATION NO.1 OF 2020

In view of the fact that the main First Appeal is finally disposed of, present civil application for stay does not survive and the same stands disposed of accordingly. Notice is discharged.

ORDER IN CIVIL APPLICATION NO.1 OF 2021

Mr. Raval, learned advocate for the applicant submits that the insurance company has already deposited entire amount of compensation along with interest and proportionate cost in the Tribunal in compliance of order of this Court.

In view of the above, since the First Appeal is finally disposed of, the Tribunal is directed to disburse the amount to the claimants in terms of the impugned judgment and award.

Present civil application stands disposed of accordingly.

(A.G.URAIZEE, J) SURESH SOLANKI