Karnataka High Court
Natioinal Insurance Company Limited, ... vs Smt. H.D. Nagarathnamma And Others on 11 April, 2001
Equivalent citations: II(2002)ACC716, 2002ACJ1267, 2001(4)KARLJ566
Author: K.R. Prasad Rao
Bench: K.R. Prasad Rao
JUDGMENT
1. This appeal arises from the judgment and award dated 24-5-1999 passed by M.A.C.T., Bangalore City in M.V.C. No. 2222 of 1997.
2. On the request of the learned Counsel for the respondents-claimants with agreement of Counsel for appellant, this appeal is being heard and disposed of on merits.
3. The Tribunal after having recorded the findings on all issues in favour of the claimants (which we need not go in detail) awarded a total sum of Rs. 16,56,640/- with interest at 6% per annum from the date of application to the date of deposit of the amount. The Tribunal held that both the owner and insurer of the vehicle in question are jointly and severally liable to pay the amount of compensation. Feeling aggrieved by the award of the Tribunal, the insurer has come before this Court by way of appeal.
4. We have heard Sri H.G. Ramesh, learned Counsel for the insurer-Insurance Company as well as Sri F.S. Dabali, Counsel for the respondents-claimants as well as Sri S.P. Shankar, Counsel for the respondent-owner.
5. Sri H.G. Ramesh, very vehemently contended that as admittedly in the present case, that the vehicle in question that caused the accident was being driven by a person, who had no licence to drive transport vehicle, and, who had a licence to drive a Light Motor Vehicle. When he was driving without a licence permitting him to drive a transport vehicle then there is a breach of the condition of the policy in terms of Section 149(2)(a)(ii). Sri Ramesh submitted that insurance policy very clearly provides that the Insurance Company will be liable to pay compensation only if the driver is having an effective driving licence, to drive the vehicle in question. Sri Ramesh submitted that as the driver at the time of the accident was only having a licence to drive a Light Motor Vehicle i.e., Light Motor Vehicle other than the transport vehicle, there was breach of terms of the conditions and the person driving. In other words, he may be said to have no effective driving licence to drive maxi cab. Learned Counsel contended that maxi cab is a transport vehicle. Sri Ramesh submitted that the insurer has produced all the documents like driving licence and policy.
6. This contention of Sri Ramesh has hotly been contested by Sri F.S. Dabali as well as by Sri S.P. Shankar.
7. It has been contended on behalf of the respondents that on the date of accident, the person who was driving no doubt, had a licence which provided for Light Motor Vehicle. Learned Counsel contended that Light Motor Vehicle's licence has been there with person driving the vehicle involved and as law provides it includes even the Light Motor Transport Vehicles, therefore, firstly, the person who was driving the vehicle was having the licence and the vehicle was covered and the insurer is also liable to pay the compensation amount as held by the Tribunal.
8. It was further submitted that the defence of the insurer is very specific. The insurer has not proved his case and failed to establish the case of breach of the conditions and it was contended that the defences available to an insurer is of "breach of the conditions of the policy as indicated in Section 149(2)(a)" or a further defence may be that policy was procured by insured by misrepresentation or fraud and no other defence is available. It was further contended by the learned Counsel for the claimants-respondents that the dispute between the owner and insurer should not really affect the right of claimants to receive compensation and the law when it provides for insurance of the motor vehicle being made compulsory, it is not for the benefit of the insurer or insured, but it is with the object that the 3rd party, in the sense of injured or the heirs of the deceased in the accident, may not suffer. That the remedy provided, by getting insurance of motor vehicle compulsory is to make remedy or award, granted in favour of the claimants, more effective and executable without any delay. Learned Counsel for the claimants contended that it should he interpreted keeping in view these basic principles of iaw and made reference to certain Supreme Court decisions. It was contended on behalf of the respondents that breach has to be established by the insurer that the insured committed breach of the terms of the conditions of the insurance policy. Merely because the vehicle was driven by a person holding no licence or holding a licence which may be said to be not covering the vehicle, cannot be said to amount to breach of conditions, unless entrustment is established that the vehicle has been entrusted by the owner of the vehicle and breach has been a conscious act and the breach has been an willful breach. Learned Counsel contended that the Insurance Company has to allege these facts and prove it. Further, the learned Counsel for the claimant-respondents contended that the Insurance Company could have summoned the driver or the owner and could have taken all his stands. But, for failure either by insurer or Insurance Company, the claimants should not be made to suffer or be deprived of effective remedy or effective award of compensation.
9. We have applied our mind to the contentions raised, by the learned Counsels for the parties. In the case of Skandia Insurance Company Limited v Kokilaben Chandravadan and Others, their Lordships of the Supreme Court laid it down in the context of Section 96 of the Motor Vehicles Act, 1939 as under.-
"In order to divine the intention of the legislature in the course of interpretation of the relevant provisions there can scarcely be a better test than that of probing into the motive and philosophy of the relevant provisions keeping in mind the goals to be achieved by enacting the same. Section 94 requiring the owner of the motor vehicle using it in a public place has been inserted in order to protect the members of the Community travelling in vehicles or using the roads from the risk attendant upon the user of motor vehicles on the roads. The law may provide for compensation to victims of the accidents who sustain injuries in the course of an automobile accident or compensation to the dependents of the victims in the case of a fatal accident. However, such protection would remain a protection on paper unless there is a guarantee that the compensation awarded by the Courts would be recoverable from the persons held liable for the consequences of the accident. A Court can only pass an award or a decree. It cannot ensure that such an award or decree results in the amount awarded being actually recovered, from the person held liable who may not have the resources. To overcome this ugly situation the legislature has made it obligatory that no motor vehicle shall be used unless a third party insurance is in force, To use the vehicle without the requisite third party insurance being in force is a penal offence. The legislature was also faced with another problem, The insurance policy might provide for liability walled in by conditions which may be specified in the contract of policy. In order to make the protection real, the legislature has also provided that the judgment obtained shall not be defeated by the incorporation of exclusion clauses other than those authorised by Section 96. It will be the obligation of the Insurance Company to satisfy the judgment obtained against the persons insured against third party risks".
It will be appropriate at thig juncture, in the context of how the law is to be interpreted in this regard to quote the following observations of their Lordships contained in paragraph 13 of the judgment, in extenso :
"In order to divine the intention of the legislature in the course of interpretation of the relevant provisions there can scarcely be a better test than that of probing into the motive and philosophy of the relevant provisions keeping in mind the goals to be achieved by enacting the same. Ordinarily it is not the concern of the legislature whether the owner of the vehicle insures his vehicle or not. If the vehicle is not insured any legal liability arising on account of third party risk will have to be borne by the owner of the vehicle. Why then has the legislature insisted on a person using a motor vehicle in a public place to insure against third party risk by enacting Section 94. Surely the obligation has not been imposed in order to promote the business of the insurers engaged in the business of automobile insurance. The provision has been inserted in order to protect the members of the Community travelling in vehicles or using the roads from the risk attendant upon the user of motor vehicles on the roads. The law may provide for compensation to victims of the accidents who sustain injuries in the course of an automobile accident or compensation to the dependants of the victims in the case of a fatal accident. However, such protection would remain a protection on paper unless there is a guarantee that the compensation awarded by the Courts would be recoverable from the persons held liable for the consequences of the accident. A Court can only pass an award or a decree. It cannot ensure that such an award or decree results in the amount awarded being actually recovered, from the person held liable who may not have the resources. The exercise undertaken by the law Courts would then be an exercise in futility. And the outcome of the legal proceedings which by the very nature of things involve the time cost and money cost invested from the scarce resources of the Community would make a mockery of the injured victims, or the dependents of the deceased victim of the accident, who themselves are obliged to incur not inconsiderable expenditure of time, money and energy in litigation. To overcome this ugly situation the legislature has made it obligatory that no motor vehicle shall be used unless a third party insurance is in force. To use the vehicle without the requisite third party insurance being in force is a penal offence. The legislature was also faced with another problem. The insurance policy might provide for liability walled in by conditions which may be specified in the contract of policy. In order to make the protection real, the legislature has also provided that the judgment obtained shall not be defeated by the incorporation of exclusion clauses other than those authorised by Section 96 and by providing that except and save to the extent permitted by Section 96 it will be the obligation of the Insurance Company to satisfy the judgment obtained against the persons insured against third party risks (vide Section 96). In other words, the legislature has insisted and made it incumbent on the user of a motor vehicle to be armed with an insurance policy covering third party risks which is in conformity with the provisions enacted by the legislature. It is so provided in order to ensure that the injured victims of automobile accidents or the dependents of the victims of fatal accidents are really compensated in terms of money and not in terms of promise. Such a benign provision enacted by the legislature having regard to the fact that in the modern age the use of motor vehicles become an inescapable fact of life, has to be interpreted in a meaningful manner which serves ratber than defeats the purpose of the legislation. The provision has therefore to be interpreted in the twilight of the aforesaid perspective".
Dealing with the question of breach of the conditions and what expression 'breach' means, their Lordships, further laid down in the above mentioned Skandia Insurance Company Limited's case, supra, in paragraph 14 as under.-
"14. Section 96(2)(b)(ii) extends immunity to the Insurance Company if a breach is committed of the condition excluding driving by a named person or persons or by any person who is not fully licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification. The expression 'breach' is of great significance. The dictionary meaning of 'breach' is 'infringement or violation of a promise or obligation' (see Collins English Dictionary). It is therefore abundantly clear that the insurer will have to establish that the insured is guilty of an infringement or violation of a promise that a person who is not (sic) duly licensed will have to be in charge of the vehicle. The very concept of infringement or violation of the promise that the expression 'breach' carries within itself induces an inference that the violation or infringement on the part of the promisor must be a wilful infringement or violation. If the insured is not at all at fault and has not done anything he should not have done or is not amiss in any respect how can it be conscientiously posited that he has committed a breach? It is only when the insured himself places the vehicles in charge of a person who does not hold a driving licence, that it can be said that he is 'guilty' of the breach of the promise that the vehicle will be driven by a licensed driver. It must be established by the Insurance Company that the breach was on the part of the insured and that it was the insured who was guilty of violating the promise or infringement of the contract. Unless the insured is at fault and is guilty of a breach the insurer cannot escape from the obligation to indemnify the insured and successfully contend that he is exonerated having regard to the fact that the promisor (the insured) committed a breach of his promise. Not when some mishap occurs by some mischance. When the insured has done everything within his power inasmuch as he has engaged a licensed driver and has placed the vehicle in charge of a licensed driver, with the express or implied mandate to drive himself it cannot be said that the insurer is guilty of any breach. And it is only in case of a breach or a violation of the promise on the part of the insured that the insured can hide under the umbrella of the exclusion clause".
This interpretation of expression 'breach' as well as law laid down to the effect that the 'breach' carries within itself induces an inference that the violation or infringement on the part of the promisor must be a wilful infringement or violation. It further lays down that burden is on the Insurance Company to allege and establish that the breach was on the part of the insured and that it was the insured, who was guilty of violating the terms or infringement of the contract and unless this is so established by the Insurance Company, the insurer cannot escape the obligation to indemnify the insured or to contend that it is exonerated. This very basic principle of law laid down in this case do apply to interpretation of Section 149(2) of the Motor Vehicles Act of 1988. This Court in the case of Oriental Insurance Company Limited v Smt. Ullasini N. Kample, and other connected appeals and cross-objections, had the occasion to consider this question. This Court while interpreting the meaning of expression 'breach' has followed the decisions in the case of Skandia Insurance Company Limited, supra, as well as the decision in the case of Shoan Lal Passi v P. Sesh Reddy and Others, and also referred to the decision in the case of United India Insurance Company Limited v Gian Chand and Others. After having followed those decisions, this Court has laid it down that the defence available to the insurer is to establish breach of the conditions by the insured and the breach has to be established as a wilful breach, conscious breach and the burden is on the Insurance Company to establish the same. In such a case, the insurer's burden is to allege and to prove by leading evidence, oral or circumstantial and to establish that the breach has been committed by the owner of the vehicle. It has to prove if the vehicle was driven by a person not holding a valid licence to drive the particular vehicle, as if the vehicle was being driven by an unlicenced person. But, it is to be pleaded that the vehicle was entrusted by the insured to such person or it was being driven by a person at the instance and active consent or permission of the owner. The Insurance Company no doubt, had to lead evidence. It is open in such cases, to the Insurance Company to summon the insured and if the insured does not come in witness-box or his driver does not come in witness-box, arguments may be raised against the case of the insured. In the present case, the learned Counsel for the appellants invited my attention to paragraph 6 of the written statement, which is as under.-
"6. However, this respondent has been given to understand that the insured had entrusted the vehicle to a person who was not duly authorised to drive a transport vehicle and on account, thereof insured has committed breach of the terms of the policy and this respondent is not liable to indemnify their insured.
Further, this respondent states that the said vehicle in question did not possess a valid Fitness Certificate on the date of the accident and as such he has violated the provisions of the Motor Vehicles Act and also the terms and conditions of the policy and hence this respondent is not liable to indemnify their insured on this ground also".
As could be seen from paragraph 6 of the written statement, it has not been disclosed from which sources, the Insurance Company has been made to understand, though it should have been disclosed, The Insurance Company ought to have pressed the issue to the effect as to whether the insured had entrusted the vehicle to a person, who was not duly authorised to drive the transport vehicle, No such issue was pressed. In the later part of paragraph 6, it is argumentative involves on question of fact. Apart from this, mere pleading is not sufficient. It was for the insurer to have produced evidence of those sources from and by whom, he was made to believe that the insured entrusted the vehicle to the driver in question, who according to the Insurance Company had no valid licence to drive the transport vehicle. Those sources which had given and the persons who gave that information ought to have been produced, examined and it was also open to the insurer to have summoned the insured or driver. After being summoned, if they would not have appeared, what would have been the consequences or what presumption could be raised is a different matter. But, that has not been done. So, the plea which the insurer has taken, remained a plea, but, has not been proved by evidence, either oral or circumstantial. We have perused the record. In this view of the matter, we firstly, find here is that the insurer failed to establish the plea of entrustment of the vehicle by the insured to the driver, who was driving the vehicle in question. When the entrustment or permission of the insured to the person concerned, who caused the accident has not been established, wilful breach of the conditions of the Insurance Policy does not appear to have been established by the insurer. Merely because a vehicle is being driven by a person having no valid licence, cannot be deemed to be breach on the part of insured unless it is established that the person at the relevant time, who was driving the vehicle had driven that vehicle on the entrustment of the vehicle to him or by consent or permission of the owner of the vehicle, The burden in such cases, is always on the Insurance Company and in case any evidence would have been produced by the Insurance Company, burden could shift on the owner. But, here no evidence has been produced by insurer. Therefore, we find that the plea which the insured has raised of the breach of the terms of the Insurance Policy or breach within the meaning of Section 149(2) of the Motor Vehicles Act, 1988 has not been established. When we so find, then there is no escape for the Insurance Company to avoid the liability. The Insurance Company has rightly been held to be liable to pay the amount in question.
10. One more question as mentioned earlier has been argued in the context of Section 3 that the driver was not entitled to drive the vehicle, namely, the transport vehicle. On behalf of the respondents, reliance has been placed on the definition of the term 'light motor vehicle' under definition 2(21) of the Motor Vehicles Act and on behalf of the appellant on the definition of the term 'transport vehicle' under definition 2(47) of the Motor Vehicles Act, which is as under.-
" "Light Motor Vehicle" means a transport vehicle or omnibus the gross vehicle weight of either of which or a motorcar or tractor or roadroller the unladen weight of any of which, does not exceed 7,500 kilograms".
" "Transport Vehicle" means a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle".
Learned Counsel for the appellant has made reference to the decisions of Madras High Court in M/s. National Insurance Company Limited v Mahadevayya and Others, and Himachal Pradesh High Court in New India Assurance Company Limited, Shimla v Suraj Prakash and Others2. On behalf of the respondents, reference has been made to the deci-
sion of the Division Bench of this Court in United India Insurance Company Limited, Mysore v Shivanna and Others , in paragraph 11, the Division Bench of this Court has laid it down as under.-
"Section 3 of the Act provides that no person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorising him to drive the vehicle; and that no person shall so drive a transport vehicle hired for his own use or rented under any scheme made under sub-section (2) of Section 75 unless his driving licence specifically entitles him to do so. The driver had a valid licence to drive the light motor vehicle. Section 3 provides the necessity to have a driving licence and further to drive the type of vehicle for which he has been given a licence to drive. As the driver had the licence to drive a light motor vehicle he would be deemed to be authorised to drive all types of L.M.V. including a transport vehicle. Offending vehicle has to be treated as a light motor vehicle as its unladen weight was less than 7,500 for which the driver had a valid licence. As the driver had a valid licence and the owner had entrusted the vehicle to the driver, the owner shall become vicariously liable to pay for the acts of his servants. Insurer as per the policy, had agreed to indemnify the owner and therefore becomes liable to pay the amount of compensation".
In the present case, the driver is proved to be having driving licence authorising him to drive 'light motor vehicle' and light motor vehicle means transport vehicle, goods vehicle etc., of which unladen weight is less than 7,500 Kgs. It is not the case of insurer nor it has been proved that the vehicle's weight was 7,500 Kgs., or more. So, the present case is covered by above decision of the Division Bench.
11. We do not find it necessary to refer this matter to a larger Bench as urged by the learned Counsel for the appellant. That here in the present case, even though the motor vehicle was being driven by a person, as contended by the appellant's Counsel to be having no licence to drive transport vehicle. In the present case, it has not been established by the insurer that there was entrustment of the vehicle by the insured to the person driving and causing accident nor is there any proof, to the effect that insured has entrusted or permitted that person to drive the vehicle. So, the defence of breach of conditions has not been established by the Insurance Company. In this view, we do not find it necessary to refer this matter to a larger Bench on question if transport vehicle does or does not come within Light Motor Vehicle though prima facie light motor vehicle's definition appears to include it, if its unladen weight is less than 7,500 Kgs.
12. Appeal as such is hereby dismissed as being without merits. Appeal is dismissed, with costs in favour of the claimants only to the extent of Rs. 1,100/-.
13. Amount under the decree including the interest up-to-date, shall be deposited within four months by the insurer before the Tribunal and 80% of that amount shall be invested by the Tribunal in the interest earning securities run either by the Government of State or Union or by the nationalised Bank in the joint names of the claimants for a period of five years and the claimant 1/respondent 1, who is the widow of the deceased and mother of the other claimants 2 and 3 shall be entitled to withdraw interest accrued every three months. The claimants-respondents will share the amount of compensation equally.