Madras High Court
Velammal And Ors. vs P. Kanagu And Ors. on 29 August, 2003
Equivalent citations: 2006ACJ1039, (2003)3MLJ410
JUDGMENT E. Padmanabhan, J.
1. The appellants herein have preferred the present appeal as against the award and decree dated 1.10.01 passed in MCOP No. 213/98 on the file of the Motor Accident Claims Tribunal (Principal District Judge of Kanyakumari) at Nagercoil, insofar as the Tribunal below exonerated the insurer of the vehicle and dismissing the claim against the insurer.
2. Heard Mr. S. Subbaiah, learned counsel appearing for the appellants and Mr. K. Kannan, learned counsel appearing for the 3rd respondent, insurance company. With the consent of either side, the appeal itself is taken up for final disposal.
3. The appellants herein instituted MCOP No. 213/98 claiming a compensation of Rs. 5,05,000/= respectively against the driver owner and insurer of the maxi cab bearing Regn. No. TN-63-3829. According to the appellants, on 24.8.98 at about 7.30 a.m., the deceased C. Subramoni was proceeding on his motorcycle near Srilekmipuram. The first respondent, driver of the maxicab, drove the cab rashly and negligently, hit against the deceased causing head injuries and the motor cyclist, Subramoni, died on the spot. The deceased was working as a carpenter at Sivakumari Timber Depot, Anjugramam, drawing a salary of Rs. 3,000/= per month. The deceased was aged 34 years and a healthy man. The deceased was the only bread winner of his family living with his young wife and three minor children. The first appellant is the widow, appellants 2, 3 and 4 are the minor children, respectivley aged 24, 7, 4 and 3 years. For the fatal accident, the appellants claimed Rs. 5,05,000/= under various heads.
4. The insurer filed a counter denying the liability as well as denying the accident. The 3rd respondent, insurer contended that it is the deceased, who drove the motorcycle rashly and negligently at the time of the accident, dashed against the maxi cab and sustained multiple injuries. The deceased alone was negligent. The claimants were called upon to prove the age, income, occupation and status of the deceased. It is contended that the Mahindra Maxi cab even at the time of the accident was driven by a person, who was not having a valid driving licence to drive a maxi cab, besides the vehicle was plying without fitness certificate. The Regional Transport Officer has levied a fine of Rs. 1,000/= on the report of the Motor Vehicles Inspector on 25.8.98 for the said violation. As per the proceedings of the Regional Transport Officer, Nagercoil, the maxi cab was released on 12.9.98. The owner has violated the policy conditions and the vehicle is not fit to ply on the road and, consequently, the insurer is not liable to pay compensation.
5. The claimant examined three witnesses and marked Exs.P1 to P-9. The driver and the vehicle owner/respondents 1 and 2 absented themselves and the insurer alone contested the claim. The insurer examined two witnesses and marked Exs.R-1 to R-4.
6. The Tribunal below framed the following only point for consideration :-
"Whether the claimants are entitled to claim compensation ? If so, how much ?"
7. The Tribunal below rendered a finding that the accident has been caused by the rash and negligent driving of the maxi cab driver, while accepting the appellants' case in this respect. The Tribunal below assessed the compensation payable at Rs. 3,36,000/= against respondents 1 and 2 and dismissed the claim petition as against the insurer of the maxi cab. The Tribunal recorded a finding that the first respondent driver has no valid licence to drive the maxi cab and the vehicle did not have a fitness certificate. Therefore, the insurer is not liable and it is the driver and the owner of the vehicle alone, who are held liable to pay the compensation. As against the said award of the Tribunal below, exonerating the insurer of the vehicle the claimants alone have preferred the present appeal.
8. Mr. S. Subbaiah, learned counsel appearing for the appellants submitted that he is not challenging the quantum of compensation awarded, but contends that the Tribunal below ought to have awarded the compensation not only against the driver and owner, but also against the insurer of the vehicle. In other words, the dismissal of the claim as against the insurer, according to the learned counsel for the appellants is liable to be interfered by this Court and award should also be passed against the insurer of the vehicle as the vehicle was covered by a valid insurance on the date of the accident and the appeal has to be allowed.
9. Per contra, Mr. K. Kannan, learned counsel appearing for the 3rd respondent insurer contended that no interference is called for with the conclusion of the Tribunal below in exonerating the insurer of the vehicle and there are no merits in this appeal.
10. Incidentally, Mr. K. Kannan, learned counsel for the 3rd respondent insurer also contended that when once notice to respondents 1 and 2, namely, the driver and the owner of the vehicle is dispensed with, no relief could be granted in this appeal even against the insurer even though the award of the Tribunal below as against the driver and owner of the vehicle has reached finality. Mr. K. Kannan persuasively contended that when notice has been dispensed with in this appeal to the owner of the vehicle, who is indemnified by the insurer, no relief could be granted at all against the insurer of the vehicle. Mr. K. Kannan substantially relied upon this objection and contended that no relief could be granted in this appeal even as against the insurer of the vehicle, in the absence of the insured. The learned counsel Mr. K. Kannan relied upon the provisions of The Code of Civil Procedure, in particular Order 41 Rule 14 of The Code of Civil Procedure, in that, unless the insured is a party, the insurer cannot be made liable and no relief could be granted in this appeal. Mr. K. Kannan also contended that the pronouncement of the Division Bench in 2001 (1) LW 21 is good in law and, therefore, prayed for dismissal of the appeal even against the insurer.
11. The following points arise for consideration in this appeal :-
"i) Whether the insurer of the vehicle is also liable to pay the compensation claimed?
ii) Whether the exoneration of the insurer by the Tribunal below on the ground of violation of policy conditions is sustainable in law ?
iii) Whether the insurer also could be held liable in this appeal even in the absence of the owner of the vehicle, whose vehicle has been indemnified by the insurer?
iv) To what relief if any?"
12.The above points could be considered together. Mr. S. Subbiah, learned counsel appearing for the appellants while accepting the findings of the Tribunal that the Driver was not authorised to drive the maxi cab on the date of accident and that the vehicle did not possess a valid Fitness Certificate for being operated, or but on road, submitted that the appellants being third parties, it is not legally sustainable to exonerate the insurance company. Further according to Mr. S. Subbiah, the claimants, being third parties, the insurer cannot avoid its liability on the ground of violation of policy conditions and for violation of policy conditions if any the insurer has to proceed against the owner of the vehicle after paying the compensation payable in respect of the appellants-claimants.
13. Being third parties, the appellants are not aware as to whether the vehicle has a valid insurance or the Driver was possessed of a valid licence or authorisation to drive or whether the vehicle is covered by a valid Fitness Certificate or not and on these grounds the insurer cannot avoid its liability to the third parties like the appellants. In this respect, the learned counsel for the appellants relied upon the pronouncement of the Supreme Court in (i) New India Assurance Company Ltd., Shimla Vs. Kamala and others, , and (ii) United India Insurance Co. Ltd., Vs. Lehru and others, as well as the Division bench judgemnt of this court Kumar Vs. National Insurance Co. Ltd., (D.B) reported in 2000 (4) L.W. 691, besides the earlier pronouncement of the Supreme Court in Sohan Lal Passi V. P.Sesh Reddy, in support of his contention.
14. Per contra, Mr. K. Kannan, learned counsel appearing for the respondent-insurer relied upon the earlier pronouncement in Kashiram Yadav Vs. Oriental Fire and General Insurance Co, , New India Assurance Co., Ltd., Vs. Mandar Madhav Tambe and others , United India Insurance Co., Ltd., Vs. Gian Chand and others in support of his contention that the insurer is not liable to pay compensation and that no interference is called for with the findings of the Tribunal exonerating the insurer of the vehicle.
15. The Vehicle was covered by a insurance policy on the date of accident is not in dispute. But the insurer seeks to avoid its liability on the ground of violation of policy conditions namely,
(i) the vehicle has no valid Fitness Certificate;
(ii) the vehicle was driven by a driver who did not possess the authorisation to drive maxi cap or the driver was not possessed of a valid licence to drive the maxi cab.
16. It is also not in dispute that the claimants are third parties and the accident has been caused by the rash and negligent driving the driver of the maxi cab resulting in instantaneous death of Subromony.
17. In view of the latter pronouncement of the Supreme Court in New India Assurance Co., Ltd., Shimla Vs. Kamala and others, , United India Insurance Co., Ltd., Vs. Lehru and others as well as two other Division Bench judgements of this court in National Insurance Co., Ltd., Bhavani Vs. Samiyathal and others reported in 2003 (I) L.W. 539 (D.B.) and Kumar Vs. National Insurance Co., Ltd., reported in 2002 (4) L.W.691 (D.B), it is not necessary to refer to the pronouncements relied upon by Mr.Kannan, learned counsel appearing for the respondent-insurance company as they are no longer good in law.
18. In New India Assurance Com., Ltd., Shimla Vs. Kamala and others, reported in 2001(3) SCC 342 while considering the scope of Section 149 of The Motor Vehicles Act and the earlier pronouncement in Skandia Insurance Co Ltd., Vs. Kokilaben Chandravadan , Sohan Lal Passi V. P.Sesh Reddy , Their Lordships of the Supreme Court held thus:-
"25.The position can be summed up thus:-
The insurer and the insured are bound by the conditions enumerated in the policy and the insurer is not liable the to insured if there is violation of any policy condition. But the insurer who is made statutorily liable to pay compensation third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy conditions on account of the vehicle being driven without a valid driving licence. Learned counsel for the insured contended that it is enough if he establishes that he made all due enquiries and believed bona fide that the driver employed by him had a valid driving licence, in which case there was no breach of the policy condition. AS we have not decided on that contention it is open to the insured to raise it before the Claims Tribunal. In the present case, if the Insurance Company succeeds in establishing that there was breach of the policy condition, l the Claims Tribunal shall direct the insured to pay that amount to the insurer. In default, the insurer shall be allowed to recover that amount (which the insurer is directed to pay to the claimant third parties) from the insured person."
19. In United India Insurance Co., Ltd., Vs. Lehru and others, reported in 2003 (3) SCC 3389 after analysing the entire case law and in particular New India Assurance Co., Ltd., Shimla Vs. Kamala, Sohan Lal Passi Vs. P.Sesh Reddy and Skandia Insurance Co., Ltd., Vs. Kikilaben Chandravadan and while considering the scope of Section 149 of the Motor Vehicles Act, their Lordships of the Supreme Court confirmed the view taken in Skandia Insurance Company Ltd., as well as Kamala's case and held thus:-
"18. Now let us consider Section 149(2). Reliance has been placed on Section 149(2)(a)(ii). As seen, in order to avoid liability under this provision it must be shown that there is a "breach". As held in Skandia and Sohan Lal Passi cases the breach must be on the part of the insured. We are in full agreement with that. To hold otherwise would lead to absurd results. Just to take an example, suppose a vehicle is stolen. Whilst it is being driven by the thief there is an accident. The thief is caught and it is ascertained that he had no licence. Can the insurance company disown liability? The answer has to be an emphatic "No". To hold otherwise would be to negate the very purpose of compulsory insurance. The injured or relatives of the person killed in the accident may find that the decree obtained by them is only a paper decree as the owner is a man of straw. The owner himself would be an innocent sufferer. It is for this reason that the legislature, in its wisdom, has made insurance, at least third-party insurance, compulsory. The aim and purpose being that an insurance company would be available to pay. The business of the company is insurance. In all businesses there is an element of risk. All persons carrying on business must take risks associated with that business. Thus it is equitable that the business which is run for making profits also bears the risk associated with it. At the same time innocent parties must not be made to suffer or loss. These provisions meet these requirements. We are thus in agreement with what is laid down in the aforementioned cases viz. that in order to avoid liability it is not sufficient to show that the person driving at the time of accident was not duly licensed. The insurance company must establish that the breach was on the part of the insured.
19. Section 3 of the Motor Vehicles Act, 1988 prohibits driving of a motor vehicle in any public place unless the driver has an effective driving licence. Further, Section 180 of the Motor Vehicles Act makes an owner or person in charge of a motor vehicle punishable with imprisonment or fine if he causes or permits a person without a licence to drive the vehicle. It is clear that the punishment under Section 180 can only be imposed if the owner or person in charge of the vehicle causes or permits driving by a person not duly licensed. Thus there can be no punishment if a person without a licence drives without permission of the owner. Section 149(2)(a)(ii) merely recognises this condition. It therefore only absolves the insurance company where there is a breach by the insured.
20. When an owner is hiring a driver he will therefore have to check whether the driver has a driving licence. If the driver produced a driving licence which on the face of it looks genuine, the owner is not expected to find out whether the licence has in fact been issued by a competent authority or not. The owner would then take the test of the driver. If he finds that the driver is competent to drive the vehicle, he will hire the driver. We find it rather strange that insurance companies expect owners to make enquiries with RTOs which are spread al over the country, whether the driving licence shown to them is valid or not. Thus where the owner has satisfied himself that the driver has a licence and is driving competently there would be no breach of Section 149(2)(a)(ii). The insurance company would not then be absolved of liability. If it ultimately turns out that the licence was fake, the insurance company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive. More importantly, even in such a case the insurance company would remain liable to the innocent third party, but it may be able to recover from the insured. This is the law which has been laid down in Skandia, Sohan Lal Passi and Kamala cases. We are in full agreement with the views expressed therein and see no reason to take a different view."
20. The above two pronouncements are on the point and they have been followed by a Division Bench of this court in Kumar Vs. National Insurance Company Ltd., reported in 2002 (4) L.W. 691 as well as National Insurance Co. Ltd., Vs. Samiyathal and others reported in 2003 (1) L.W. 539. With respect we also take the same view taken by the two earlier Division Benches, while following the pronouncements of the Supreme Court.
21. In the result we hold that the insurer cannot avoid the liability to answer the claim of the third parties, but the insurer is at liberty to proceed against the owner of the vehicle and recover the amount paid by it after paying the claimants/appellants herein. In fact, in Kumar Vs. National Insurance Co. Ltd., R.JAYASIMHA BABU, J., speaking for the Division Bench went a step further and held thus:-
"9. In this context, we notice the directions which the Apex court has given in the case of New India Assurance Company Ltd. Vs. Kamala of the judgemnt it was observed thus:-
"We may point out that as per the order passed by this court on 6.3.2000, the appellant insurance company was directed top ay the award amount to the claimants. We are told that the amount was paid to by the appellant to the claimants. Now the Claims Tribunal has to decide the next question whether the insurance company is entitled to recover that amount from the owner of the vehicle on account of the vehicle Being driven by a person who had no valid licence to drive the vehicle".
That direction was made by the court in that case as it was not clear as to whether the driver in fact possessed a valid driving licence at the time of the accident. In this case, this clearly established that the driver did not have the driving licence for driving a Heavy Goods Vehicle. The Driving Licence itself has been marked as an exhibit in this case. The liability of the owner to pay the comparative to the claimant has also been adjudicated upon and that finding has also not been challenged before us.
10. It is, therefore, unnecessary to remit the matter tot he Tribunal to adjudicate on the claim inter-se as between the insurer and the owner. There shall be a decree in favour of the insurer and against the owner for the amount which the insurer has already deposited and which amount is now being permitted to be withdrawn by the claimants. It will be open to the insurer to execute this decree against the owner of the vehicle. If the claimants are entitled to any amount in excess of the amount already deposited, it will be open to them to proceed against the owner by way of execution of the award."
22.The later Division Bench in National Insurance Co., Ltd., Vs. Samiyathal reported in 2003 (I) L.W. 539 also followed the law laid down in Kumar Vs. National Insurance Co., Ltd., we, on our part, while agreeing with the two Division Bench Judgements of this court referred to supra and while following the decision of the Supreme Court in United India Insurance Co., Ltd., Vs. Lehru and others, we hold that the Driver of the vehicle, owner of the vehicle and insurer of the vehicle are liable to pay the claimants in MCOP.No. 213 of 1998, the sum of Rs. 3,36,000/= with interest at 9% from the date of accident till date of realisation.
23. While allowing the appeal, we also further hold that the third respondent herein, namely, the insurer of the vehicle is entitled to recover the amount. We also make it clear that the insurance company is liable to pay the claimants and thereafter the insurance company is entitled to recover the entire amount which it has to pay in terms of the award passed herein from the owner of the vehicle bearing No. T.N.63-3829 by filing a Execution Petition before the Tribunal below.
24. One another contention or objection advanced by Mr. K. Kannan, being that the claimants/appellants have given up the Driver of the Vehicle and owner of the vehicle and therefore there is nothing further to be decided in this appeal or that the giving up of the owner as well as the driver of the vehicle is fatal and will result in exoneration of the insurer of the vehicle. We are not persuaded to sustain this objection. Admittedly, the owner and the Driver of the vehicle have remained ex parte before the court below and the insurer alone contested the claim. The Tribunal below held that the owner of the vehicle is liable and exonerated the insurance company on the ground that there is violation of policy conditions with which conclusion we have interfered and reversed in view of the pronouncement of the Supreme Court.
25. As the Driver and Owner of the vehicle have remained absent before the Tribunal below and suffered an award and admittedly no appeal has been preferred by them, the appellants have made an endorsement to the effect that no notice need be sent to these respondents. The Insurance Company alone has been served and it appeared through counsel. As of today, there is a judgement and award against the Driver as well as owner of the vehicle as awarded by the tribunal below. The only relief sought for in this appeal is that the insurance company also should be made liable That being the factual position, merely because service on the owner and the driver of the vehicle was dispensed with in this appeal since they have remained ex parte before the tribunal below, the contention that automatically the insurer also gets discharged and that there can be no award against the insurer cannot be sustained. It is not as if there will be any inconsistency in the award. There will be an award either against the driver and owner as has been granted by the tribunal below or against the insurer as well in addition to the driver and owner. Therefore there will be no inconsistent award or decree at all as sought to be contended by the counsel for respondent-insurance company.
26. That apart, the owner and the driver have remained absent even before the Tribunal below and they did not contest the proceedings and they have suffered an award which has reached finality in so far as they are concerned, the insurer's objection alone has been sustained and the insurer was exonerated by the tribunal. The claimants seek to fasten the liability on the insurer as well in addition to the owner of the vehicle as well as the driver of the vehicle for their tortuous liabiilty. Therefore the objection raised by Mr. Kannan, learned counsel cannot be legally sustained. This point is answered against the respondents.
27. In the result, the judgement and award of the Tribunal below are modified as hereunder:-
(i) There will be an award against all the three respondents, namely, (i) Driver, (ii) Owner and (iii) insurer of the vehicle in MCOP.No: 213 of 1998 on the file of the Motor Accident Claims Tribunal (Principal District Judge) Kanniyakumari at Nagercoil directing payment of compensation of Rs. 3,36,000/= with interest at 9% from the date of award and till the award amount is paid;
(ii) The award amount is apportioned at Rs. 84,000/= equally among the claimants as apportioned by the Tribunal below;
(iii)The amount payable to the minor-claimants 2 to 4 shall be invested in Fixed Deposit in a Nationalised Bank and the same shall be paid to them as and when they reach majority with accrued interest;
(iv) Clause (4) of the decree passed by the Tribunal is deleted;
(v) The insurer on its paying and satisfying the award shall be entitled to reinstatement of the entire sum from the owner and driver of the vehicle (respondents 1 and 2) and the insurer shall in the event of non-payment shall enforce the recovery against respondents 1 and 2 by way of Execution of the award.
(vi) The claimants are entitled to cost of one set in the Original Petition;
(vii) The parties shall bear their respective costs in this appeal.