Telangana High Court

United India Insurance Co. Ltd., ... vs G.Sai Sharat Chandra Reddy, ... on 25 April, 2023

Bench: Namavarapu Rajeshwar Rao

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                                                           MACMA No.985 OF 2016




THE HON'BLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO

                   M.A.C.M.A No.985 of 2016

JUDGMENT:

This M.A.C.M.A is filed by the appellant/ 2nd respondent

Insurance Company aggrieved by the Order and decree

dt.27.07.2015 in O.P No.29 of 2011 passed by the XV Additional

District Judge, Ranga Reddy District at L.B Nagar (for short, 'the

Court below).

2. For convenience, the parties are hereinafter referred to as

they are arrayed before the Court below.

3. Vide the aforesaid order, the Court below awarded

compensation of Rs.3,86,080/- to the petitioner against his claim

of Rs.5,00,000/- to be payable by the respondents jointly and

severally on account of injuries sustained by him in the accident

due to the rash and negligent driving of the driver of the lorry

bearing No.AP-29-T-8044.

3. Heard both sides and perused the record.

4. Learned counsel for the 2nd respondent/Insurance Company

contended that the Court below erred in passing the impugned 2 RRN,J MACMA No.985 OF 2016

Order in favour of the petitioner as the driver of the lorry was not

possessing a valid driving license and despite the 2nd

respondent/Insurance Company led evidence to that extent, the

Court below fixed the liability against it as well. He further

contended that the Ex.X2/Driving licence does not pertain to the

accused driver Mohd. Ismail S/o Mohd. Mahabub in the present

case and the Court below simply relied upon it without verifying

the full details. Hence, prayed to allow the appeal by setting

aside the impugned order.

5. On the other hand, learned Counsel appearing for the

petitioner contended that the Court below was justified in

passing the impugned order keeping in view all the factors and

prayed to dismiss the appeal.

6. A perusal of the relevant paragraph in respect of Ex.X-

2/attested copy of licence makes it clear that the driver of the

crime vehicle was possessing driving licence. The

RW.2/Divisional Assistant from the office of RTO, Gulbarga

admitted that Ex.X2/attested copy of the licence is prepared by

them and as per Ex.X2, it is a licence for light motor vehicle Non-

transport. The contention of the learned counsel for the 2nd

respondent/Insurance Company is that the licence Ex.X2 does 3 RRN,J MACMA No.985 OF 2016

not pertain to the accused driver Mohd. Ismail S/o Mohd.

Mahabub in the present case. Having pleaded so, they did not

choose to examine either the owner or the driver of the crime

vehicle. Had they done so, the truth would have come to the

light, but they did not do so. Considering the evidence of RWs 1

and 2 and Ex.B1 and B2, the Court below had directed both the

respondents to pay the compensation jointly and severally.

7. It is relevant to mention that the Hon'ble Supreme Court in

the case of Shamanna Vs. Divisional Manager The Oriental

Insurance Co. Ltd.,1 held as under:

"In the case of third party risks, as per the decision in National Insurance Company Ltd. v. Swaran Singh and others (2004) 3 SCC 297, the insurer had to indemnify the compensation amount payable to the third party and the insurance company may recover the same from the insured. Doctrine of "pay and recover" was considered by the Supreme Court in Swaran Singh case wherein the Supreme Court examined the liability of the insurance company in cases of breach of policy condition due to disqualifications of the driver or invalid driving licence of the driver and held that in case of third party risks, the insurer has to indemnify the compensation amount to the third party and the insurance company may recover the same from the insured. Elaborately considering the insurer's contractual liability as well as statutory liability vis-a-vis the claims of third parties, the Supreme Court issued detailed guidelines as to how and in what circumstances, "pay and recover" can be ordered. In para (110), the Supreme Court summarised its conclusions 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.



    Civil Appeal No.8144 of 2018 decided on 08.08.2018
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                                                                                MACMA No.985 OF 2016

(iii) The breach of policy condition e.g. disqualification of the 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 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 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 a duly licensed driver or one who was not disqualified to drive at the relevant time.

(iv) 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 wherefore would be on them, (v) The court cannot lay down any criteria as to how the said burden would be discharged, inasmuch as the same would depend upon the facts and circumstances 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 the 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 Court belows in interpreting the policy conditions would apply "the rule of main purpose" and the concept of "fundamental breach" to allow defences available to the insurer 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 fulfill 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 Court below 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 Court below has necessarily the power and jurisdiction to decide disputes inter se between the 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.

7. As per the decision in Swaran Singh case, onus is always upon the insurance company to prove that the driver had no valid driving licence and that there was breach of policy conditions. Where the driver did not possess the valid driving licence and there are breach of policy conditions, "pay and recover" can be ordered in case of third party risks. The Court below is required to consider as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver, does not fulfill the requirements of law or not will have to be determined in each case.

8. The Supreme Court considered the decision of Swaran Singh case in subsequent decision in National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700, 5 RRN,J MACMA No.985 OF 2016

wherein this Court held that "the decision in Swaran Singh case has no application to cases other than third party risks and in case of third party risks the insurer has to indemnify the amount and if so advised, to recover the same from the insured". The same principle was reiterated in Prem Kumari v. Prahlad Dev and others (2008) 3 SCC

193.

13. So far as the recovery of the amount from the owner of the vehicle, the insurance company shall recover as held in the decision in Oriental Insurance Co. Ltd. v. Nanjappan and others (2004) 13 SCC 224 where this Court held that "....that for the purpose of recovering the same from the insured, the insurer shall not be required to file a suit. It may initiate a proceeding before the concerned Executing Court as if the dispute between the insurer and the owner was the subject matter of determination before the Court below and the issue is decided against the owner and in favour of the insurer."

8. In the case on hand, the Court below failed to see the

law laid down in National Insurance Company Limited vs.

Swaran Singh and others.2 As per the decision in the Swaran

Singh case, the onus is always upon the insurance company to

prove that the driver had no valid driving licence and that there

was a breach of policy conditions. Where the driver did not

possess a valid driving licence and there are breach of policy

conditions, "pay and recover" can be ordered in case of third

party risks. The Court below is required to consider whether the

owner has taken reasonable care to find out whether the driving

licence produced by the driver, does not fulfill the requirements

of law or not will have to be determined in each case. As such,

this Court is of the view that respondent No.2/Insurance Company

2004 ACJ 1.

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                                                            MACMA No.985 OF 2016

shall first compensate the petitioner and later recover the same from

the 1st respondent/owner as stated supra.

9. Accordingly, the appeal is disposed of by directing the

appellant/Respondents No.2 Insurance Company to pay the

compensation awarded by the Court below i.e. Rs.3,86,080/- with

proportionate costs and interest @ 7.5% p.a. from the date of petition

till the date of realization. The appellant/Respondents No.2 Insurance

Company shall deposit the said amount within two (02) months from

the date of receipt of a copy of this judgment at the first instance and is

then at liberty to recover the same from the 1st respondent/owner of the

vehicle in accordance with law. On such deposit, the petitioner is

permitted to withdraw the entire amount. No order as to costs.