Gujarat High Court
Bhikhabhai Gandubhai Parmar vs Harjivanbhai Dhanjibhai Pitroda on 28 January, 2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 2722 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J. C. DOSHI
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Approved for Reporting Yes No
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BHIKHABHAI GANDUBHAI PARMAR
Versus
HARJIVANBHAI DHANJIBHAI PITRODA & ANR.
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Appearance:
MR. HEMAL SHAH(6960) for the Appellant(s) No. 1
MASUMI V NANAVATY(9321) for the Defendant(s) No. 2
MR GC RAY(721) for the Defendant(s) No. 1
MR VIBHUTI NANAVATI(513) for the Defendant(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 28/01/2025
ORAL JUDGMENT
Being aggrieved and dissatisfied with the judgement and award
dated 17/04/2017 passed by the Motor Accident Claims Tribunal
(Special), Rajkot in claim case no. 861/2008, the appellant has preferred
this appeal seeking to challenge the exoneration of insurance company
from paying the liability to the third party and awarded total amount of
Rs. 1,76,720/- along with 9% interest against the present opponent no.1.
2. The short facts of the case are that on 11/2/2008, the applicant was
standing near P & T Colony, Gondal Road, Rajkot and at that time, the
driver of aforesaid motor cycle drove the same in full speed and in a
manner to endanger the human life, without observing the traffic rules
and in rash and negligent manner and dashed to the motor cycle with the
applicant and caused accident, wherein the applicant sustained physical
injuries for which he has filed this claim petition against the opponents
claiming aforesaid compensation with interest and costs.
3. Heard learned advocates appearing for the respective parties.
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4. Learned Advocate Mr.Shah would mainly argue that licence of the
driver was expired on 13/05/2006 but the accident took place subsequent
thereto on 11/02/2008. He would further submit that tribunal believed
that there was absence of licence or it is a case of no licence and
exonerated the insurance company from liability to pay the
compensation; however the tribunal while passing such order failed to
countenance that claimant being third party and should not be made
sufferer to technical breach of terms and conditions of the policy which is
between insurer and insured. He would further submit that at no point of
time, the RTO has disqualified the opponent no.1 from riding the vehicle
in class of motorcycle which involved in the road accident and therefore
he would further submit to pass the order and to direct the insurance
company to satisfy the award at first instance and to recover the same
from owner of the vehicle.
4.1 Upon above submissions, he would submit to allow this appeal.
5. Per contra, learned advocate Mr.Nanavaty reiterating the two dates
i.e. date of expiry of driving licence and the date of accident, he would
submit that driving licence of opponent no.1 was expired almost two
years back. He would submit that in case on hand, the driver and owner
of the vehicle are the same and therefore he was knowing that he was not
holding driving licence and yet drove the vehicle.
5.1 He would further submit that knowledge of opponent no.1 that he
was not holding the licence on the date of accident and he being owner of
the vehicle permitting himself to drive the vehicle resulting into the road
accident is fundamental breach of the terms and conditions of the policy
and in view of such aspect, even order for pay and recover cannot be
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passed.
5.2 He would further submit that in view of Section 156(1) of the MV
Act, it would be obligatory upon the licence holder to renew its licence
within 30 days from the date of expiry and if the driver failed to renew its
licence and since in the present case the driver and owner is the one and
the same party, it was also within the knowledge of the owner that he has
not renewed his licence and was not holding any licence to ply the
vehicle and therefore insurance company would not liable to indemnify
the insured. He would refer to the decision in case of Ram Babu Tiwari
vs. United India Insurance Co Ltd., [2008 (8) SCC 165].
5.3 Referring to the decision in case of National Insurance Co Ltd vs
Vidhyadhar Mahariwala [2008 (12) SCC 701] he would submit that if the
driving licence of the offending vehicle is not in force on the date of
accident and the fact is within the knowledge of the owner, the insurance
company would not be liable to pay the compensation as it is a case
where driving licence not valid on the date of accident. It would be only
owner of the vehicle liable to pay the compensation. The decision in case
of Mahmad Rafik Munnebhai Ansari vs. Gujarat State Road Transport
Corporation [2021 LawSuit (Guj) 5064] is also referred to buttress the
contention. Lastly, reliance was placed upon a decision of this Court
rendered in First Appeal No.1278 of 2010 on 15/07/2022.
5.4 By making above submissions, it is submitted to dismiss the appeal
and to confirm the judgment and award impugned.
6. Having heard the learned advocates appearing for the respective
parties and examined the record and proceedings, the fact that on the date
of accident there was no driving licence is undeniable. The driving
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licence which was issued to the opponent no.1 by the concerned RTO
expired on 13/05/2006 within 30 days there-from or subsequently it is not
renewed at least upto the date of accident i.e. 11/02/2008. The opponent
no.1 is also owner of the vehicle. Therefore it is a case where driver and
owner of the vehicle are one and the same and it was within the
knowledge of the owner that he being the driver is not authorized to
driver the vehicle as he had no licence on the date of accident. Thirdly,
the RTO concerned has not disqualified him from riding the vehicle. In
background of the above aspect, it would be a case of no licence on the
date of accident. The Hon'ble Apex Court in case of National Insurance
Company Limited vs. Swarna Singh & Others [2004 (3) SCC 297] while
summing up the finding on various issues related to the licence in
paragraph 109 has held as under:
"The summary of our findings to the various issues as raised in
these petitions are 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) 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
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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 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
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.
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(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 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
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
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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 adjudication of the claims of the victims."
7. Thus, in view of aforesaid finding (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 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. In view of finding (iv), the insurance companies saddled with
burden to establish breach on the part of the owner of the vehicle. Finding
(v) prescribed that no direct formula or criteria that to how the burden
would be discharged, as it is dependent upon the facts and circumstance
of each case. Finding (vi) cast upon the duty to instance company to
prove the 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 on the condition of driving licence is/ are so fundamental as are
found to have contributed to the cause of the accident. The Tribunals was
also directed to interprete 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.
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9. The Apex Court in IFFCO Tokio General Insurance Co. Ltd., vs.
Geeta Devi & Others rendered in Special Leave Petition (C) No.19992 of
2023 after referring to to Skandia Insurance Co. Ltd. vs. Kokilaben
Chandravadan and others (1987) 2 SCC 654; in Sohan Lal Passi vs. P.
Sesh Reddy and others [(1996) 5 SCC 21] and then referred to Swarna
Singh & Others (supra) passed the order of pay and recover.
10. In Ram Chandra Singh vs Rajaram [AIR 2018 SC 3789], in a
case of fake licence, it was held that mere fact that the driving licence
was fake would not per se to insurer.
11. In Parminder Singh vs New India Assurance Company [AIR
2019 SC 3128], the Hon'ble Apex court in a case of no valid licence
again insisted to pass order of pay and recover and has held in paragraph
7.1 and 7.2 as under:
"7.1. This Court in Shamanna & Ors. v. The Divisional Manager,
The Oriental Insurance Co. Ltd. & Ors., held that if the driver of
the offending vehicle does not possess a valid driving license, the
principle of 'pay and recover' can be ordered to direct the
insurance company to the pay the victim, and then recover the
amount from the owner of the offending vehicle.4 4 (2018) 9 SCC
7.2. We deem it just and fair to direct the Respondent - Insurance
Company to pay the enhanced amount of compensation as
indicated in Para. 6 above, to the Appellant within a period of 12
weeks from the date of this judgment. The Respondent - Insurance
Company is directed to make out a Demand Draft in the name of
the Appellant, which can be used for his care for the rest of his life.
The Respondent - Insurance Company is entitled to recover the
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amount from the owners and drivers of the two offending trucks."
12. In view of the above, what could be noticeable that even in absence
of the no valid and effective driving licence, the claimant being third
party should not be made sufferer for technical breach of the terms and
conditions of the policy. It is to be reiterated that at no point of time the
opponent no.1 was disqualified from riding the motorcycle.
13. The policy is produced at Exh.34 which is of two wheeler package
policy. Under clause 5 under the head of liability to third party, the
avoidance clause is interpreted in the contract which reads thus:
"Nothing in this Policy or any endorsement hereon shall affect the
right of any person indemnified by this policy or any other person
to recover an amount under or by virtue of the Provisions of the
Motor Vehicles Act. But the Insured shall repay to the Company
all sums paid by the company which the company would not have
been liable to pay but for the said provision."
14. Thus, the evidence clause is one additional factor which permit the
Court to pass the order for pay and recover. The evidence clause exists
between the insured and insurer in policy of contract executed between
the party. It gives right to the insurer to recover the amount from the
insured in case of insurance company is not held liable but is directed to
satisfy the award. For the foregoing reasons, the contention of learned
advocate Mr.Nanavaty that since on the date of accident, opponent no.1
was not holding valid and effective driving licence, no order of pay and
recover can be passed failed to sustain. Insofar as the decisions relied
upon by learned advocate Mr.Nanavaty is concerned, they are on
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factually different aspect and would not avail any assistance, particularly,
in view of the above settled legal position of law.
15. For the reasons recorded above, the present appeal is partly
allowed. The impugned judgment and award is modified to the extent that
insurance company shall satisfy the award at the first instance and
thereafter to recover the same from the owner of the vehicle on the basis
of this judgment. The Insurance Company is directed to deposit the entire
awarded amount as stated above within a period of six weeks from the
date of receipt of this order at the first instance with interest and costs.
16. Upon such deposit, the Tribunal shall disburse the entire awarded
amount to the claimants, by account payee cheque / NEFT / RTGS, after
proper verification. While making the payment, the Tribunal shall deduct
the courts fees, if not paid, in accordance with rules/law.
Record and proceedings be sent back to the concerned Tribunal,
forthwith.
(J. C. DOSHI,J)
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