Rajasthan High Court - Jaipur
O R D E R vs Sarbati & Ors on 10 November, 2014
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR. O R D E R S. B. CIVIL MISC. APPEAL No.749/2003. : : National Insurance Company Ltd. Vs. Sarbati & Ors. : : Date of Order : 10.11.2014 HON'BLE MR. JUSTICE PRASHANT KUMAR AGARWAL Mr. Tej Prakash Sharma, Advocate for the appellant-Insurance Company. Mr. Raj Kamal Gaur, Advocate for the respondent No.8-Owner. BY THE COURT
Heard learned counsel for the parties.
Disputing its liability to make payment of the amount of compensation as awarded by the learned Tribunal on the ground that the driver of the offending vehicle was not having a valid and effective license at the time of the accident, the appellant-Insurance Company has filed this civil misc. appeal under Section 173 of the Motor Vehicles Act, 1988 (hereinafter referred to as the Act) against the judgment and award dated 10.12.2002 passed by the Motor Accident Claims Tribunal and Additional District Judge No.1, Kishangarh Bas (District Alwar) (hereinafter referred to as the Tribunal) in Motor Accident Claims Case No.36/1996. The Tribunal has awarded Rs.1,82,584/- alongwith simple interest @ 9% per annum as compensation to the claimant-respondents on account of death of Shri Ramuram.
Brief relevant facts for the disposal of this appeal are that the claimant-respondents, who are legal representatives of the deceased-Ramuram, filed a claim petition under Section 166 of the Act on 8.3.1996 before the Tribunal with the averments that on 5.1.1996 at 6:00 pm when Shri Ramuram was returning to his house from Sabji Mandi, near Railway crossing a vehicle (truck) bearing Registration No.HR-38-3992 being driven by respondent-Shri Mukesh Kumar rashly and negligently hit the deceased resulting fatal injury to him. The claimant-respondents claimed Rs.7,03,400/- as compensation. The appellant-Insurance Company filed reply and apart from others averred that at the time of the said accident the driver of the offending vehicle was not having a valid and effective driving license and, therefore, the Insurance Company is not liable to pay the compensation. It was further pleaded that the owner (insured) of the vehicle involved in the accident violated the terms and conditions of the insurance policy issued in his favour as he allowed the offending vehicle to be driven by a person having no valid and effective driving license. It is to be noted that the owner and driver of the offending vehicle did not appear before the Tribunal despite due service of notice upon them and ex-parte proceedings were initiated against them.
On the basis of pleadings of the parties, necessary issues were framed and for the purpose of disposal of this appeal, Issue No.3 is relevant, which is reproduced as below :
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The parties produced oral as well as doucmentary evidence in support of their respective case. The Tribunal considered the Issue No.3 and came to a conclusion that the appellant-Insurance Company cannot disown its liability to make payment of the amount to be awarded as compensation only by the reason that at the time of the accident the driver was not having a valid and effective driving license. Even the order to first make payment of amount of compensation to the claimants and then recover the same from the owner and driver of the offending vehicle was not made by the Tribunal although for coming to the aforesaid conclusion the Tribunal took into consideration the case of New India Assurance Co.Ltd Vs. Kamla & Ors reported in 2001 ACJ 843 (SC) .
Assailing the aforesaid finding of the Tribunal, the counsel for the appellant-Insurance Company raised the following grounds :
(i) From the un-controverted evidence available on record, it is well proved that at the time of the aforesaid accident the respondent-driver was not having a valid and effective driving license to drive any type of vehicle including Heavy Transport Vehicle. Although, no documentary evidence was produced on behalf of the appellant to prove the aforesaid fact, but the charge-sheet filed against the respondent-driver, copy of which has been produced before the Tribunal, shows that after investigation, it was found that at the time of accident the driver of the offending vehicle was not having a valid and effective driving license and, therefore, offence under Section 3/181 of the Act is also made out against him and, therefore, no adverse inference can be drawn against the appellant-Insurance Company only on the ground that no documentary evidence was filed on its behalf in support of its contention that at the time of accident the driver was not having a valid and effective driving license.
(ii) It was the duty of the insured-owner of the offending vehicle to appear as a witness before the Tribunal to show that he took every possible step that his vehicle is being driven by a duly licensed person only and at the time of the accident the driver was driving the vehicle without his knowledge and there was no breach of any terms and conditions of the insurance policy on its part. In absence of the same, adverse inference should have been drawn against the owner-insured and it should have been held by the Tribunal that the owner deliberately and knowingly allowed his vehicle to be driven by a person having no valid and effective driving license, but the Tribunal did not consider this aspect of the matter in a proper prospective and wrongly fastened the liability on the appellant-Insurance Company only by the reason that a third party has died as a result of the accident. In the present case, a letter dated 16.1.2000 (Exhibit-A-3) was sent on behalf of the appellant-Insurance Company through its counsel to the respondent-owner asking him to produce the particulars of the driving license held by the driver of the offending vehicle so that after verification of the same proper defence can be taken by it in the aforesaid claim petition, but despite receiving the aforesaid letter neither any reply was given nor particulars of the driving license were provided to the appellant by the respondent-owner. This inaction on the part of the owner of the offending vehicle is clear indication of the fact that it was in his knowledge that the respondent-driver is not having a valid and effective driving license to drive the offending vehicle, which is a goods vehicle and he deliberately allowed the respondent-driver to drive the same. It is also relevant that neither the owner nor driver appeared before the Tribunal despite due service of notice upon them and this is also clear indication of the fact that the owner of the vehicle did not take necessary steps to ensure that the offending vehicle is driven by a person having a valid and effective driving license.
(iii) Sections 3 & 4 of the Act clearly provides that a vehicle can be driven in a public place only by a person having valid and effective driving license and if any person in contravention of the aforesaid provisions drives a vehicle he is liable to be convicted under Section 181 of the Act.
(iv) As in the present case, it has been established that the driver of the offending vehicle was having no valid and effective driving license to drive any type of vehicle and, therefore, there was fundamental breach of the terms and conditions of the insurance policy by the owner-insured, no order for payment of compensation by the appellant-Insurance Company to the claimants could have been passed by the Tribunal.
(v) Even if for the sake of arguments, it is admitted that as in the present case a third party has died as a result of the aforesaid accident, it was the duty of the Tribunal to pass a further order that the appellant first make payment of the compensation to the claimants and then recover the same from the owner/driver of the offending vehicle adopting the prescribed procedure, but even such order has not been passed.
In support of his submissions, learned counsel for the appellant relied upon the case of New India Assurance Co.Ltd Vs. Kusum & Ors reported in II (2010) ACC 518 (SC).
On the other hand, learned counsel for the respondent-owner-Shri Satyaveer Singh defending the impugned judgment and award raised the following grounds :
(i) It is well settled legal position that it is for the insurer to prove that at the time of accident the driver of the offending vehicle was not having valid and effective driving license, but in the present case only oral evidence was produced on behalf of the appellant-Insurance Company and no documentary evidence was produced and in absence of the same, it cannot be held that the respondent-driver was not having valid and effective driving license. Merely because charge-sheet has also been filed for the offence under Section 3/181 of the Act, it cannot be said that at the time of the accident the respondent-driver was not having valid and effective driving license to drive the offending vehicle as it is also well settled legal position that the Tribunal has to decide such question raised before it on the basis of evidence produced before it and not on the basis of evidence collected during investigation by the police or on the basis of charge-sheet filed against the driver after investigation.
(ii) It is also well settled legal position that it is the duty of the insurer to further prove that the owner of the offending vehicle knowingly and deliberately allowed such person to drive his vehicle having no valid and effective driving license, but in the present case neither averments were made in the reply filed on behalf of the appellant nor evidence was produced in support of the same. Merely because owner and driver of the offending vehicle did not appear before the Tribunal and failed to explain their position about driving license adverse inference cannot be drawn against them and it cannot be held that the owner-insured knowingly and deliberately allowed the respondent-driver to drive his vehicle. Similarly, no adverse inference can be raised against the owner by the reason that no reply was given to the letter allegedly issued on behalf of the appellant-Insurance Company.
I have considered the submissions made on behalf of the respective parties, perused the material available on record as well as the relevant legal provisions and the case law including that relied upon on behalf of the appellant. In this appeal following two issues are involved to be decided by this Court:-
(i) Whether in a case in which a vehicle is being driven by a person not holding a valid and effective driving license, the liability to pay the amount of compensation can be fastened on the Insurance Company ?
(ii) If the Court comes to a conclusion that the appellant-Insurance Company cannot be held to make payment of the amount of compensation, whether a further order can be passed to the effect that the Insurance Company first make payment to the claimants and recover the same from the owner/driver of the vehicle following the procedure prescribed by law?
In the present case, on the basis of evidence available on record it has been found by the Tribunal that at the time of the aforesaid accident the driver of the offending vehicle was not having a valid and effective driving license to drive any type of vehicle i.e. it is a case of no license at the time of accident. No cause has been shown on behalf of the respondent-owner that the aforesaid finding is against the evidence available on record. Although, no documentary evidence has been filed on behalf of the appellant-Insurance Company in this regard, but NAW-1-Shri Parmeshwari Shanker produced on behalf of the appellant in his affidavit filed as examination-in-chief on oath has clearly stated that at the time of the accident the driver of the offending vehicle was not having a valid and effective driving license to drive a Heavy Transport Vehicle and that is why charge-sheet for the offence under Section 3/181 of the Act has also been filed against him. The witness has further averred in the affidavit that a legal notice was sent to the owner of the vehicle by the appellant-Insurance Company on 16.1.2000 through its counsel asking him to provide particulars of the driving license held by the driver of the offending vehicle, but despite notice was received by him he failed to produce driving license before it. In his cross-examination, the witness stated that the verification could not be made about the driving license in a RTO Office by the reason that the company was not having any particulars of the driving license held by the driver of the offending vehicle. As already said, the owner and driver of the offending vehicle remained ex-parte before the Tribunal and, therefore, no cross-examination was made from the witness on their behalf and his statement remained un-controverted. The statement of the aforesaid witness also got support from the copy of the charge-sheet (Ex.1) and copy of the letter dated 16.1.2000 (Ex.A-3) and, therefore, the finding of the Tribunal on the question of possession of valid and effective driving license by the respondent-driver is to be affirmed and maintained.
The first issue, which has been framed by this Court in the present case, has been considered in detail by a Bench of three Hon'ble Judges of the Hon'ble Supreme Court in the case of National Insurance Co.Ltd. Vs. Swaran Singh & Ors. reported in (2004) 3 SCC 297. In para 84, it has been held by the Hon'ble Court as below :
We have analysed the relevant provisions of the said Act in terms whereof a motor vehicle must be driven by a person having a driving licence. The owner of a motor vehicle in terms of Section 5 of the Act has a responsibility to see that no vehicle is driven except by a person who does not satisfy the provisions of Section 3 or 4 of the Act. In a case, therefore, where the driver of the vehicle, admittedly, did not hold any licence and the same was allowed consciously to be driven by the owner of the vehicle by such person, the insurer is entitled to succeed in its defence and avoid liability. The matter, however, may be different where a disputed question of fact arises as to whether the driver had a valid licence or where the owner of the vehicle committed a breach of the terms of the contract of insurance as also the provisions of the Act by consciously allowing any person to drive a vehicle who did not have a valid driving licence. In a given case, the driver of the vehicle may not have any hand in it at all, e.g. a case where an accident takes place owing to a mechanical fault or vis-major.
It was thus held by Hon'ble Court that the owner of a motor vehicle has a responsibility to see that no vehicle is driven except by a person who does satisfy the provisions of Section 3 or 4 of the Act. It was further held that in a case in which admittedly the driver of the vehicle did not hold any license and the same was allowed consciously to be driven by the owner of the vehicle by such person the insurer is entitled to succeed in its defence and avoid liability.
Hon'ble Court in the aforesaid case summarized the legal position in para 110 which is as below:-
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.
(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, 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 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 duly licensed driver or one who was not disqualified to drive at the relevant time.
(iv) 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.
(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 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.
(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 the 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 the insurer against the 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.
It is thus held by the Hon'ble Court that mere absence of driving license for driving at the relevant time is not in itself defence available to the insurer against 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 duly licensed driver or one who was not disqualified to drive at the relevant time. It was further held that the Court cannot laid down any criteria as to how the said burden would be discharged, in as much as the same would depend upon the facts and circumstance of each case. It was also held that even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding a valid license by the driver or his qualification to drive during the relevant time, 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.
In para seven of the case of New India Assurance Co.Ltd. vs. Kusum & Ors.(supra), Hon'ble Supreme Court has held as below:-
"An owner of a vehicle in terms of the provisions of the Motor Vehicles Act is legally obligated to get the vehicle insured. The rights and liabiltis of the parties to the contract of insurance would be governed thereby subject to the provisions of the Motor Vehicles Act. One of the conditions which would make the insurance company liable to reimburse the owner of the vehicle in respect of payment of the amount of compensation in favour of a claimant is that the driver of the vehicle must possess a valid driving licence. The owner has a duty to see that a vehicle is driven by a person having a valid driving licence. The licence of the driver of the said bus was proved to be invalid. The owner did not raise any contention that he has used due diligence in allowing the driver to drive the vehicle."
In the case of National Insurance Co.Ltd. Vs. Kaushalya Devi & ors. Reported in 2008 ACJ 2144 (SC), in a case in which a goods vehicle was involved in the accident and the same was being driven by a person not having a valid and effective driving license to drive such a vehicle, Hon'ble Supreme Court held that if the owner of the vehicle did not step into the witness-box to state anything, the High Court was justified in holding that insurance company is not liable to make payment and the owner alone is liable to make payment of the amount of compensation.
In the case of United India Insurance Co.Ltd. Vs. Gian Chand & ors. reported in 1998 (1) TAC 36 (SC), it was found as a fact that the insured handed over the vehicle for being driven by a unlicenced driver and taking into consideration the proved facts Hon'ble Supreme Court exonerated the insurance company from its liability to meet the claim of the third party to pay compensation.
The well settled legal position emerging out from the aforesaid decisions of Hon'ble Supreme Court is that mere absence of a valid and effective driving license although itself not a valid defence exonerating the insurance company to make payment of compensation in favour of a third party and burden is upon it to prove that the owner of the vehicle consciously allowed the driver to drive its vehicle, but at the same time it is also duty of the owner of the vehicle to appear as a witness before the Tribunal or the Court and to clarify his stand in what circumstances his vehicle was driven by a person having no valid and effective driving license. The legal position is also that no definite criteria can be laid down by the Court as to the manner in which the burden caste upon the insurance company is to be discharged and the same would depend upon the facts and circumstances of each case.
In the light of the aforesaid well settled legal position, if the facts of the present case are considered, I am of the view that learned Tribunal has went wrong to fasten the liability to make payment of the compensation on the appellant-Insurance Company. As already said, it has been established that the driver of the offending vehicle at the time of the accident was having no valid and effective driving license to drive any type of the vehicle including heavy transport vehicle. In the present case, the owner and driver of the offending vehicle did not appear before the Tribunal and the owner failed to explain in what circumstances the offending vehicle was being driven by a person having no valid and effective driving license. It is also relevant to state that notice was sent on behalf of the appellant-Insurance Company to the respondent-owner, but neither reply to the notice was sent nor particulars of the driving license were provided to the appellant. I am of the considered view that inaction on the part of the respondent-owner in this regard is clear indication of the fact that it was in his knowledge that the respondent-driver is not having a valid and effective driving license to drive any type of vehicle including a Heavy Transport Vehicle, but even then he deliberately permitted him to drive the same. I am also of the view that it was the duty of the owner to appear as a witness before the Tribunal and to explain his position in what circumstances the offending vehicle was driven by a person having no valid and effective driving license and in absence of the same adverse inference is to be drawn against him and it must be held that he conciously allowed a person to drive his vehicle having no valid and effective driving license. In the present case, the owner did not raise any contention that he has used due deligence in allowing the driver to drive the vehicle.
The net result of the aforesaid discussion is that in the facts and circumstances of the case, the appellant-Insurance Company is not liable to make payment of the compensation and the learned Tribunal has wrongly fastened the liability upon it.
The second issue involved in the present appeal has also been considered in some detail by Hon'ble Supreme Court in the aforesaid case of National Insurance Co.Ltd Vs. Swaran Singh & Ors (supra). Although, it was held by Hon'ble Court that even if it is found that the insurance company is not liable to make payment of the compensation even then the liability of the insurance company to satisfy the decree at the first instance and to recover the awarded amount from the owner and driver thereof is well settled, but at the same time it was further held by the Hon'ble Court that the Tribunal and the Court must, however, exercise their jurisdiction to issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued, despite arriving at a finding of fact to the effect that the insurer has been able to establish that the insured has committed a beach of contract of insurance, the Insurance Company shall be entitled to realise the awarded amount from the owner or driver of the vehicle, as the case may be, in exeuction of the same award having regard to the provisions of Section 165 and 168 of the Act. From the aforesaid observations of Hon'ble Supreme Court, the legal position emerging out is that the Tribunal or the Court is not bound in each and every case to issue direction to the insurance company to first make payment to the victim and then to realise from the owner or driver of the vehicle and it would depend upon the facts and circumstances of each case whether such a direction is to be made or not.
If in the light of the aforesaid legal position facts and circumstances of the present case are considered, I am of the definite view that no such direction could be made to the appellant-Insurance Company to first pay the claimants and thereafter realise the same from the respondent-owner and driver of the vehicle.
As already said, despite due service of notice upon them neither owner nor driver of the offending vehicle appeared before the Tribunal and no pain was taken by them to explain the circumstances in which the vehicle was being driven by a person having no valid and effective driving license. Even reply to the notice sent by the appellant-Insurance Company was sent by the respondent-owner. Both owner and driver did not have courage to appear as a witness before the Tribunal and to explain their position with regard to the driving license. In such circumstances, it would be travesty of justice if the appellant-Insurance Company is directed to pay the amount and to recover the same from the owner and driver of the vehicle as it would face immense difficulties to recover the same by filing a execution petition after such a long time.
Consequenlty, by setting aside the judgment and award dated 10.12.2002 passed by the Motor Accident Claims Tribunal and Additional District Judge No.1, Kishangarh Bas (District Alwar) in Motor Accident Claims Case No.36/1996, the appeal filed by the appellant-Insurance Company is allowed with costs of Rs.10,000/- payable by the respondent-owner to the appellant. The claimant-respondents are free to recover the amount of compensation from the owner and driver of the vehicle involved in the accident in accordance with the procedure prescribed by law. However, it is made clear that the amount already paid by the appellant-Insurance Company under Section 140 of the Act would not be liable to be refunded to it by the claimants, but the appellant may recover the same from the owner/driver of the offending vehicle by following the procedure presecribed by law.
(PRASHANT KUMAR AGARWAL),J.
A.Arora/-
(Reserved).
All corrections made in the judgment/order have been incorporated in the judgment/order being emailed.
AMIT ARORA PERSONAL ASSISTANT