Karnataka High Court
Smt H Kumari vs B C Sridhara on 16 June, 2020
Equivalent citations: 2021 (1) AKR 18
Bench: B.V.Nagarathna, Ravi V Hosmani
-: 1 :-
IN THE HIGH COURT OF KARNATAKA, BENGALURU
R
DATED THIS THE 16TH DAY OF JUNE, 2020
PRESENT
THE HON'BLE MRS. JUSTICE B.V.NAGARATHNA
AND
THE HON'BLE MR. JUSTICE RAVI V. HOSMANI
M.F.A. No.2482/2015 (MV-D)
BETWEEN:
1. SMT. H. KUMARI
W/O. LATE B.S. THIPPESWAMY,
AGED ABOUT 31 YEARS,
2. DODDASANJEEVAPPA
S/O. LATE HANUMAPPA,
AGED ABOUT 68 YEARS,
3. SMT. MARAKKA
W/O. DODDASANJEEVAPPA,
AGED ABOUT 63 YEARS,
4. DEEPTHI
D/O. LATE B.S. THIPPESWAMY,
AGED ABOUT 3 YEARS, MINOR,
REP. BY HER NATURAL GUARDIAN MOTHER,
i.e., PETITIONER NO.1
ALL ARE RESIDENTS OF
BANGARAKKANAHALLI VILLAGE,
CHITRADURGA TALUK & DISTRICT. ... APPELLANTS
(BY SRI SAGAR B.B., ADVOCATE FOR SRI SATISH M.
DODDAMANI, ADOVATE)
AND:
1. B.C. SRIDHARA
S/O. CHIKKE GOWDA,
AGED ABOUT 29 YEARS,
DRIVER OF THE TANKER LORRY,
BEARING REG.NO.KA-13/9689,
R/O. BOMMENAHALLI VILLAGE,
DUDDA HOBLI,
-: 2 :-
HASSAN TALUK & DISTRICT - 573 201.
2. VISHWANATH
S/O. NINGE GOWDA, MAJOR,
OWNER OF THE TANKER LORRY,
BEARING REG.NO.KA-13/9689,
R/O. HALASINAHALLI, YOGIHALLI,
DUDDA HOBLI,
HASSAN TALUK & DISTRICT - 573 201.
3. THE DIVISIONAL MANAGER,
NATIONAL INSURANCE CO. LTD.,
MELGIRI PLAZA,
DENTAL COLLEGE ROAD,
DAVANAGERE - 577 002.
4. THE DIVISIONAL CONTROLLER,
KSRTC, CHIKKAMAGALUR DIVISION,
CHIKKAMAGALUR - 573 207.
5. THE MANAGING DIRECTOR/CHAIRMAN,
INTERNAL SECURITY FUND, KSRTC,
SHANTHINAGAR, K.H. ROAD,
BANGALORE - 560 027. ... RESPONDENTS
(BY SRI GIRISH B. BALEDARE, ADVOCATE FOR R-1;
SRI M.Y. LOKESHA, ADVOCATE FOR R-2;
SRI M. NARAYANAPPA, ADVOCATE FOR R-3; R-4 - SERVED;
SRI B. PHALAKSHAIAH, ADVOCATE FOR R-5)
THIS MFA IS FILED U/S 173(1) OF MV ACT AGAINST THE
JUDGMENT AND AWARD DATED 10.10.2014 PASSED IN MVC
NO.600/2012 ON THE FILE OF THE II ADDITIONAL SENIOR
CIVIL JUDGE, & ADDITIONAL MACT-V, CHITRADURGA, PARTLY
ALLOWING THE CLAIM PETITION FOR COMPENSATION AND
SEEKING ENHANCEMENT OF COMPENSATION.
THIS APPEAL COMING ON FOR DICTATING JUDGMENT
THIS DAY, NAGARATHNA J., MADE THE FOLLOWING:
-: 3 :-
JUDGMENT
Though this appeal was listed for admission, on hearing learned counsel for the respective parties with their consent, it has been heard finally and is disposed of by this judgment.
2. The claimants in MVC.No.600/2012 have filed this appeal, being aggrieved by the judgment and award passed by the II Addl. Senior Civil Judge & Addl. MACT-V, Chitradurga (hereinafter referred to as "the Tribunal" for the sake of convenience), dated 10/10/2014 in MVC.No.600/2012.
3. For the sake of convenience, the parties shall be referred to in terms of their status before the Tribunal.
4. The claimants, being the widow, parents and minor daughter of B.S.Thippeswamy, filed the claim petition under Section 166 of the Motor Vehicles Act, 1988 (hereinafter referred to as "the Act", for short), seeking compensation of Rs.45,00,000/- on account of death of Thippeswamy in a road traffic accident that occurred on 02/07/2012. According to the claimants, on the fateful day, Thippeswamy was discharging his duty as a conductor of KSRTC bus bearing registration No.KA-18/F-469, which -: 4 :- was proceeding from Arasikere to Dharmasthala via Bengaluru, in a moderate speed, following all traffic rules.
At about 11.15 p.m., when the bus was proceeding near Malali Cross on NH-48, B.M.Road, Shanthi Grama Hobli near Hassan, respondent No.1/driver of the oil tanker lorry bearing registration No.KA-13/9689, which was coming from the opposite direction, drove the same in the wrong side, in a rash and negligent manner at a high speed and dashed to the right side portion of the KSRTC bus. As a result, the driver of the said bus lost control over the bus and dragged to the left-side ditch and dashed against a coconut tree. As a result of the impact, Thippeswamy who was sitting in the bus was thrown out from the front glass, sustained grievous injuries and fractures all over the body and died on the spot. Postmortem examination was conducted on the body of Thippeswamy and his body was shifted in a hired vehicle for cremation to his native place and after performing his last rites, his body was cremated.
According to the claimants, deceased Thippeswamy was working as a driver-cum-conductor under respondent Nos.4 and 5 and was earning Rs.11,886/- p.m. He used to contribute his income for the maintenance of the family.
On account of sudden and untimely death of Thippeswamy, -: 5 :- the family was suffering from agony and sorrow as they had lost the only bread earner of the family. Therefore, they contended that the accident occurred on account of rash and negligent driving of the driver of the oil tanker bearing No.KA-13/9689.
5. In response to the notices issued by the Tribunal, respondent Nos.1 and 2, who are driver and owner of the oil tanker, remained absent and they were placed ex parte. Respondent Nos.3 to 5 appeared and filed their respective statement of objections.
6. Respondent No.3 denied the averments made in the claim petition and contended that the accident had occurred due to rash and negligent driving by the driver of the KSRTC bus and not on account of negligence on the part of the driver of the oil tanker lorry. It was further contended that the driver of the oil tanker was not holding a valid and effective driving licence as on the date of the accident. That respondent Nos.1 and 2 had violated the terms and conditions of the policy of the insurance by allowing respondent No.1, who was not having a valid licence, to drive the oil tanker. Hence, respondent No.3 sought for dismissal of the case. Respondent Nos.4 and 5 -: 6 :- contended that the accident had occurred on account of negligence on the part of the driver of oil tanker and not due to negligent driving of the driver of the KSRTC bus.
They contended that the compensation claimed was exorbitant. Hence, they also sought dismissal of the claim petition.
7. On the basis of the rival pleadings, the Tribunal framed the following issues for its consideration:
(i) Whether the petitioners prove that B.S.Thippeswamy, S/o.Dodda Sanjivappa sustained severe injuries and died in the alleged RTA on 02/07/2012 at about 11.15 p.m. near Malali Cross, on NH-48, B.M.Road, Shanthi Grama Hobli, Hassan Taluk, due to rash and negligence of driving of driver of the Tanker Lorry bearing Reg.No.KA-13/9689 by its driver?
(ii) Whether the petitioners are entitled for compensation, if so, at what quantum and from whom?
(iii) What order or award?
8. In support of their case, the claimants examined two witnesses viz., H.Kumari, the widow of the deceased as PW.1 and Ramanna Bennur as PW.2. They produced fifteen documents, which were marked as Exs.P-
1 to P-15. The respondents examined R.D.Almad as RW.1 -: 7 :- and Palanna as RW.2 and produced five documents, which were marked as Exs.R-1 to R-5.
9. On the basis of the said evidence, the Tribunal answered issue No.1 in the affirmative, issue No.2 partly in the affirmative and awarded compensation of Rs.24,28,312/- with interest at the rate of 7.50% per annum from the date of claim petition till realization and fastened the liability on respondent No.2/owner of the oil tanker, while exonerating respondent No.3/insurer from its liability and dismissed the claim petition as against respondent Nos.3 to 5. Being aggrieved by fastening of liability on respondent No.2 and not on respondent No.3/insurer and by the meager amount of compensation awarded by the Tribunal, the claimants have preferred this appeal.
10. We have heard Sri Sagar B.B., learned counsel appearing for Sri Satish M.Doddamani, learned counsel, and Sri M. Narayanappa, learned counsel for respondent No.3 and perused the material on record.
11. Appellants' counsel made a two-fold submission. He contended that the Tribunal was not right in fastening the liability entirely on respondent No.2/ -: 8 :- owner of the oil tanker and thereby exonerating respondent No.3/insurer of the oil tanker. He contended that the driver of the oil tanker had a licence to drive a heavy goods vehicle. No doubt, the oil tanker is a hazardous goods vehicle, but he had licence to drive heavy goods vehicle. Ex.P-15 is the driving licence issued to respondent No.1. The said licence was issued for a period of three years and on the date of accident, he had the licence to drive a heavy goods vehicle, but the endorsement with regard to driving of a hazardous goods vehicle was not found on the said licence. He contended that the conditions required for possessing a licence to drive a hazardous vehicle may not have been complied with in the instant case, but, nevertheless, the insurer cannot be exonerated of its liability. He submitted that in several cases where the endorsement to drive a hazardous vehicle is not found on the driving licence, which is for driving a heavy goods vehicle, nevertheless, in such cases, the Courts have made pay and recover orders. That the insurance company ought to have paid the compensation to the claimants and recover the same from respondent No.2/owner of the vehicle. He therefore submitted that -: 9 :- the order and direction of the Tribunal on the aspect of liability may be modified.
12. Learned counsel for the appellants next contended that the award of compensation of Rs.24,28,312/- with interest at the rate of 7.50% per annum from the date of claim petition till deposit is meager. He submitted that the compensation awarded on the head of loss of dependency is on the lower side as having regard to the dictum of the Hon'ble Supreme Court in the case of Sarla Verma vs. Delhi Transport Corporation [(2009)6 SCC 121] (Sarla Verma), 1/3rd has been deducted from the actual income of the deceased towards personal expenses, whereas 1/4th had to be deducted as there are four claimants. He further submitted that only Rs.200/- per month could have been deducted towards professional tax and having regard to the dictum of the Hon'ble Supreme Court in the case of National Insurance Company Limited vs. Pranay Sethi [(2017)16 SCC 680] (Pranay Sethi), 50% of the income had to be added towards future prospects. He contended that the compensation on the head of loss of dependency must be increased. He further submitted that an overall compensation may be enhanced.
-: 10 :-13. Per contra, learned counsel for respondent No.3/insurance company supported the impugned judgment and award and contended that there is no merit in this appeal. He submitted that the provisions of the Act are very stringent with regard to the conditions to be complied with for driving a hazardous goods vehicle. That in the instant case, the vehicle, being an oil tanker, was a heavy goods vehicle and a hazardous goods vehicle also and under the provisions of the Act, it was necessary to have an endorsement on the licence, which is a compulsory requirement, which ought to have been complied with by respondent No.1. The same not being complied with in the instant case, the Tribunal was justified in fastening the liability on respondent No.2/owner of the vehicle. He submitted that there is no merit in the contentions of appellants' counsel on the liability aspect.
14. Learned counsel for the respondent/insurer next contended that the award of compensation is, in fact, on the higher side on the heads of loss of consortium, loss of love and affection as well as towards transportation of dead body, cremation and obsequies ceremonies. The recent judgment of the Hon'ble Supreme Court in the case -: 11 :- of Pranay Sethi has clearly laid down the parameters and the upper limit of amounts that could be awarded towards conventional heads. Therefore, the compensation awarded by the Tribunal may not be interfered with. It may be that the insurer has not preferred an appeal on the quantum of compensation, the reason being, the claim petition against the insurer was dismissed, but at the same time, this Court ought to reconsider the quantum of compensation awarded by the Tribunal and reduce the same so that the claimants do not receive a windfall in the instant case. He contended that there is no merit in the appeal and hence the appeal may be dismissed.
15. By way of reply, learned counsel for the claimants/appellants drew our attention to the recent judgment of the Full Bench of this Court in the case of New India Assurance Co.Ltd. vs. Yallavva & another [MFA.No.30131/2010 pronounced on 12/05/2020] and submitted that even if there is a violation of the terms and conditions of the policy, the insurance company would have to pay the compensation to the claimants, who are innocent third parties and recover the same from the owner of the offending vehicle. He submitted that the said Full Bench decision may be applied in the instant case.
-: 12 :-16. He next submitted that subsequent to the judgment of the Hon'ble Supreme Court in the case of Pranay Sethi, the same has been considered in the case of Magma General Insurance Co. Ltd. Vs. Nanu Ram alias Chuhru Ram and Others [2018 ACJ 2782] (Magma General Insurance Co. Ltd.) and the compensation on the conventional heads have been considered on the basis of an expansive interpretation of the concept of loss of consortium from the point of view of the widow, parents and children and hence, having regard to the said dictum, compensation in the instant case may be re-assessed accordingly. He submitted that even if the compensation awarded on the heads of loss of consortium, loss of estate, loss of love and affection and funeral expenses are re-
assessed, nevertheless, the award of compensation in the instant case would have to be enhanced having regard to the fact that the compensation on the head of loss of dependency would require enhancement. He therefore contended that the appeal filed by the appellants may be allowed.
-: 13 :-17. Having heard learned counsel for the appellants/claimants and learned counsel for the insurer, the following points would arise for our consideration:
(i) Whether the Tribunal was right in excluding the insurance company from its liability and fastening the same on respondent No.2/owner of the oil tanker lorry?
(ii) Whether the claimants are entitled to additional compensation?
(iii) What order?
18. The fact that Thippeswamy, who was discharging his duty as conductor of KSRTC bus bearing No.KA-18/F-469, which was proceeding from Arasikere to Dharmasthala via Bengaluru on 02/07/2012 and the said bus met with an accident at about 11.15 p.m. on account of rash and negligent driving on the part of respondent No.1/driver of the oil tanker bearing No.KA-13/9689, has been established by the claimants. However, the controversy is with regard to indemnification of respondent No.2/owner of the oil tanker by respondent No.3/insurance company. In this regard, the contention of learned counsel for the insurer is that the driver of the insured vehicle/offending vehicle did not possess a valid driving licence on the fateful day. It was contended that the driver possessed a licence to drive a heavy goods vehicle, -: 14 :- but without endorsement to drive a hazardous goods vehicle. Therefore, the contention of learned counsel is that the Tribunal was justified in exonerating the insurer and fastening the liability on the owner of the oil tanker.
It is not in dispute that the driver of the oil tanker, who was the cause for the accident in the instant case, possessed a driving licence to drive a heavy goods vehicle, but the oil tanker is a hazardous goods vehicle.
19. Before proceeding to the nitty gritty of the controversy as such, it would be useful to refer to the relevant provisions of the Act. Section 2 of the Act is the definition clause, which defines "driving licence" in Section 2(10); "licensing authority" in Section 2(20) and the expression "prescribed" is defined in Section 2(32) of the Act. The same are extracted as under:
"2. Definitions.--In this Act, unless the context otherwise requires,--
x x x (10) "driving licence" means the licence issued by a competent authority under Chapter II authorising the person specified therein to drive, otherwise than as a learner, a motor vehicle or a motor vehicle of any specified class or description;
x x x -: 15 :- (20) "licensing authority" means an authority empowered to issue licences under Chapter II or, as the case may be, Chapter III;
x x x (32) "prescribed" means prescribed by rules made under this Act."
Next, it would be useful to consider the definition of the expression "heavy goods vehicle" which is defined in Section 2(16) of the Act, which reads as under:
"(16) "heavy goods vehicle" means any goods carriage the gross vehicle weight of which, or a tractor or a road-roller the unladen weight of either of which, exceeds 12,000 kilograms."
The expression "goods" is defined in Section 2(13), which reads as under:
"(13) "goods" includes livestock, and anything (other than equipment ordinarily used with the vehicle) carried by a vehicle except living persons, but does not include luggage or personal effects carried in a motor car or in a trailer attached to a motor car or the personal luggage of passengers travelling in the vehicle."
"Transport vehicle" is defined in Section 2(47) of the Act. It includes a goods carriage and the expression "goods carriage" is defined in Section 2(14) of the Act.
The aforesaid definitions are extracted as under:-: 16 :-
"(47) "transport vehicle" means a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle."
x x x "(14) "goods carriage" means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods."
Chapter II of the Act deals with "Licensing of Drivers of Motor Vehicles", the relevant provisions for this case are Sections 3, 5, 10, 11 and 14, which read as follows:
"3. Necessity for driving licence.-- (1) 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 no person shall so drive a transport vehicle other than a motor cab or motor cycle 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 so to do.
(2) The conditions subject to which sub-section (1) shall not apply to a person receiving instructions in driving a motor vehicle shall be such as may be prescribed by the Central Government.
x x x
5. Responsibility of owners of motor vehicles for contravention of sections 3 and 4.-- No owner or person in charge of a motor vehicle shall cause or permit any person who does not satisfy -: 17 :- the provisions of section 3 or section 4 to drive the vehicle.
x x x
10. Form and contents of licences to drive.-- (1) Every learner's licence and driving licence, except a driving licence issued under section 18, shall be in such form and shall contain such information as may be prescribed by the Central Government.
(2) A learner's licence or, as the case may be, driving licence shall also be expressed as entitling the holder to drive a motor vehicle of one or more of the following classes, namely:--
(a) motor cycle without gear;
(b) motor cycle with gear;
(c) invalid carriage;
(d) light motor vehicle;
(e) transport vehicle;
(i) road-roller;
(j) motor vehicle of a specified description.
11. Additions to driving licence.-- (1) Any person holding a driving licence to drive any class or description of motor vehicles, who is not for the time being disqualified for holding or obtaining a driving licence to drive any other class or description of motor vehicles, may apply to the licensing authority having jurisdiction in the area in which he resides or carries on his business in such form and accompanied by such, documents and with such fees as may be prescribed by the Central Government for the addition of such other class or description of motor vehicles to the licence.
-: 18 :-(2) Subject to such rules as may be prescribed by the Central Government, the provisions of section 9 shall apply to an application under this section as if the said application were for the grant of a licence under that section to drive the class or description of motor vehicles which the applicant desires to be added to his licence.
x x x
14. Currency of licences to drive motor vehicles.-- (1) A learner's licence issued under this Act shall, subject to the other provisions of this Act, be effective for a period of six months from the date of issue of the licence.
(2) A driving licence issued or renewed under this Act shall,--
(a) in the case of a licence to drive a transport vehicle, be effective for a period of three years:
Provided that in the case of licence to drive a transport vehicle carrying goods of dangerous or hazardous nature be effective for a period of one year and renewal thereof shall be subject to the condition that the driver undergoes one day refresher course of the prescribed syllabus; and
(b) in the case of any other licence,--
(i) if the person obtaining the licence, either originally or on renewal thereof, has not attained the age of fifty years on the date of issue or, as the case may be, renewal thereof,---: 19 :-
(A) be effective for a period of twenty years from the date of such issue or renewal; or (B) until the date on which such person attains the age of fifty years, whichever is earlier;
(ii) if the person referred to in sub-clause (i), has attained the age of fifty years on the date of issue or as the case may be.
renewal thereof, be effective, on payment of such fee as may be prescribed, for a period of five years from the date of such issue or renewal:
Provided that every driving licence shall, notwithstanding its expiry under this sub-section continue to be effective for a period of thirty days from such expiry"
Rule 9 of the Central Motor Vehicles Rules, 1989 (for short "the Rules") reads as under:
"9. Educational qualifications for drivers of goods carriages carrying dangerous or hazardous goods.-- (1) One year from the date of commencement of Central Motor Vehicles (Amendment) Rules, 1993, any person driving a goods carriage carrying goods of dangerous or hazardous nature to human life shall, in addition to being the holder of a driving licence to drive a transport vehicle, also has the ability to read and write at least one Indian language out of those -: 20 :- specified in the VIII Schedule of the Constitution and English and also possess a certificate of having success fully passed a course consisting of following syllabus and periodicity connected with the transport of such goods:
Period of training 3 days
Place of training any institute recognized by the State
Syllabus Government
A Defensive driving Duration of training for
Questionnaire A & B--1st and 2nd day
Cause of accidents
Accidents' statistics
Driver's personal fitness
Car condition
Braking distance
Highway driving
Road/ Pedestrian crossing
Railway crossing
Adapting to weather
Head on collision
Rear end collision
Night driving
Films and discussion
B. Advanced driving skills and training -- Checklist
(i) Discussion -- outside/below/near vehicle Before starting -- product side
-- inside vehicle During driving -- correct speed/gear
-- signalling
-- lane control
-- overtaking/giving side
-- speed limit/safe distance
-- driving on slopes Before stopping -- safe stopping place, signalling, Condition road width, After stopping -- preventing vehicle movement
-- wheel clocks
-- vehicle attendance Night driving -- mandatory lighting requirements
-- headlamp alignment
-- use of dipped beam
(ii) Field test/training -- 1 driver at a lime C. Product safety -- UN classification Duration UN Panel -- Hazchem Code of training
-- Toxicity for (C) Flammability Third day.
other definitions Product information -- Tremcards
-- CIS/MSDS
-- Importance of temperature pressure, level
-- Explosive limits
-- Knowledge about equipment Emergency procedure -- Communication
-- Spillage handling -: 21 :-
-- Use of PPE
-- Fire fighting
-- First Aid
-- Toxic release control
-- Protection of wells, rivers, lakes, etc.
-- Use of protective equipment
-- Knowledge about valves, etc. (2) The holder of a driving licence possessing the minimum educational qualification or the certificate referred to in sub-rule (1), shall make an application in writing on a plain paper along with his driving licence and the relevant certificate to the licensing authority in whose jurisdiction he resides for making necessary entries in his driving licence and if the driving licence is in Form 7, the application shall be accompanied by the fee as is referred to in Serial No. 8 of the Table to rule 32.
(3) The licensing authority, on receipt of the application referred to in sub-rule (2), shall make an endorsement in the driving licence of the applicant to the effect that he is authorised to drive a goods carriage carrying goods of dangerous or hazardous nature to human life.
(4) A licensing authority other than the original licensing authority making any such endorsement shall communicate the fact to the original licensing authority."
20. It may be noted that the proviso to Section 14(2)(a) of the Act was introduced by way of an amendment made to the Act with effect from 14/11/1994.
Similarly, Rule 9 of the Rules has been amended with effect from 26/03/1993.
-: 22 :-21. Sections 2(3), 2(4), 2(5), 2(6), 2(7), 2(9), 2(10), 2(14), 2(15) and 2(16) of the Act have been considered by the Hon'ble Supreme Court in the case of National Insurance Company Limited vs. Swaran Singh and others [(2004) 3 SCC 297] (Swaran Singh) and various aspects of a driver of a motor vehicle possessing a driving licence as under:
"(a) when a person has been granted licence for one type of vehicle but at the relevant time he was driving another type of vehicle;
(b) where the driver's licence is found to be fake;
(c) learner's licence."
After considering various judgments rendered till then, at paragraph No.104, the Hon'ble Supreme Court has observed that it is evident from the discussions made that the liability of the insurance company to satisfy the decree at the first instance and to recover the awarded amount from the owner or driver thereof was holding the field for a long time, but at paragraph No.107, the Hon'ble Supreme Court observed as under:
"107. We may, however, hasten to add 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 -: 23 :- 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 breach of contract of insurance as envisaged under sub- clause (ii) of clause (a) of sub-section (2) of Section 149 of the Act, 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 execution of the same award having regard to the provisions of Sections 165 and 168 of the Act. However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it had not been able to do so, the insurance company may initiate a separate action therefore against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given opportunity to defend at all. Such a course of action may also be resorted to when a fraud or collusion between the victim and the owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage."
The summary of findings at paragraph No.110 read 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 -: 24 :- 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 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 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 -: 25 :- 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 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 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 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 -: 26 :- 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 -: 27 :- 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 insurance on behalf of the insured can be taken recourse to 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."
On a reading of the same, we find that sub-para (vi) is very significant and crucial to the present case. The Hon'ble Supreme Court has stated that 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 the liability towards the insured unless the said breach or breaches on the condition of driving licence is/are so -: 28 :- fundamental as are found to have contributed to the cause of the accident. The Courts 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. It is in light of the aforesaid dictum, which has been followed in several cases thereafter, we propose to consider as to whether there is a fundamental breach on the part of the owner of the vehicle, which would result in exoneration of the respondent/insurance company as has been found by the Tribunal in the instant case.
22. But before doing so, it would be necessary to lay emphasis on proviso to Section 14(2)(a) of the Act read with Rule 9 of the Rules. Section 14 deals with currency of licences to drive motor vehicles, according to which, a learner's licence issued under the Act is effective for a period of six months from the date of issuance of licence. A driving licence issued or renewed under the Act in the case of a licence to drive a transport vehicle is effective for a period of three years, but the proviso to Section 14(2)(a) states that in the case of a licence to drive a transport vehicle to carry goods of dangerous or hazardous nature shall be effective for a period of one year -: 29 :- only and the renewal is subject to the condition that the driver undergoes one day refresher course of the prescribed syllabus. The syllabus prescribed is under Rule 9 of the Rules. Therefore, there are two conditions precedent with regard to issuance of a licence to drive a transport vehicle to carry petroleum goods or dangerous or hazardous nature. In order to seek a renewal of such licence, in the first instance, the driver must possess a driving licence to drive a transport vehicle and in addition, he must undergo one day training in the prescribed syllabus. The syllabus is prescribed in Rule 9 of the Rules.
23. Rule 9 stipulates that in addition to being the holder of a driving licence to drive a transport vehicle, the driver must have the ability to read and write at least one Indian language out of those specified in the VIII Schedule of the Constitution and English and also possess a certificate of having successfully passed a course consisting of the syllabus prescribed and periodicity connected with the transport of such goods. The said period of training initially is for three days, but for a renewal, it is only one day. The place of training is at any institute recognized by the State Government. After getting a certificate as per sub-rule (1) and possessing -: 30 :- minimum educational qualification, the holder of the driving licence has to make an application in writing along with his driving licence and the relevant certificate to the licensing authority in whose jurisdiction he resides for making necessary entries in his driving licence and if the driving licence is in Form No.7, the application shall accompany the requisite fee. The licensing authority, on receipt of the application referred to in the aforesaid manner shall make an endorsement in the driving licence of the applicant to the effect that he is authorized to drive a goods carriage carrying goods of dangerous or hazardous nature to human life. If the licensing authority, other than the original licensing authority makes any such endorsement, it shall communicate the fact to the original licensing authority. Thus, as per Rule 9 of the Rules, initially on complying with the conditions stated in the Rules, an application has to be made before the licensing authority for an endorsement in the driving licence that he is authorized to carry goods of dangerous or hazardous nature to human life. Subsequently, when it comes to renewal of the said licence, the condition precedent is that the driver must undergo a one day refresher course.
-: 31 :-24. In this regard, it is necessary to consider two aspects of the matter: the first is, as to, what is the object and purpose of authorization as per Rule 9, which is in the form of an endorsement made on the driving licence. The second is, whether, in the absence of there being an endorsement on Ex.R-1, the insurer could be exonerated from its liability to satisfy the award.
25. While considering the first of the two aspects, we find that the prescription stipulated under the proviso to Section 14(2)(a) of the Act must be complied with, before a person could undertake to drive a transport vehicle carrying goods of dangerous or hazardous nature in the context of renewal of the said licence. Thus, the two conditions precedent namely, to possess a licence to drive a transport vehicle and secondly, to undergo one day refresher course of the prescribed syllabus are mandatory conditions, which cannot be deviated from. If both these conditions are complied with, then there would be consideration for renewal of the driving licence for a period of one year by an endorsement on the licence. In other words, if either of the conditions is not complied, there would be no renewal of the driving licence to drive a transport vehicle carrying dangerous or hazardous nature.
-: 32 :-26. As far as seeking an endorsement on the licence to drive a transport vehicle carrying goods of dangerous or hazardous in nature is concerned, the same is stipulated in Rule 9 of the Rules inasmuch as any person driving a goods carriage carrying goods of dangerous or hazardous nature to human life shall, in addition to being the holder of a driving licence to drive a transport vehicle, he must in the first instance have the ability to read and write at least one Indian language out of those specified in VIII Schedule of the Constitution and English and also possess a certificate for having successfully passed a course consisting of the syllabus for a period of three days.
Therefore, in the first instance, the aforesaid three conditions must be complied with. Thereafter, the person must make an application in writing to the concerned licencing authority in whose jurisdiction he resides for making necessary entries in his driving licence and the licensing authority, on receipt of such an application should make an endorsement in the driving licence of the applicant to the effect that he is authorized to drive a goods carriage carrying goods of dangerous or hazardous nature to human life. The purpose of authorization is to grant an approval to drive a transport vehicle carrying -: 33 :- goods of dangerous or hazardous nature. Such an authorization is in the form of an endorsement. An endorsement is nothing but a public declaration or an approval granted on the driving licence so as to declare that the holder of such a licence is authorized to drive a transport vehicle carrying goods of dangerous or hazardous nature and has complied with the mandatory conditions stipulated for seeking such an endorsement on the driving licence.
27. In the instant case, it is noted that respondent No.3 had examined the concerned RTO with regard to driving licence of respondent No.1 as RW.1. In his evidence, it has been clearly admitted that respondent No.1 had possessed licence to drive a heavy goods vehicle, but not to drive hazardous goods vehicle at the time of accident as there was no endorsement on the licence.
RW.1 produced 'B' register extract of the offending vehicle as per Ex.R-1 and permit as per Ex.R-2. Ex.R-3 is the history sheet for drivers pertaining to respondent No.1.
On perusal of the same, the Tribunal has come to the conclusion that respondent No.1 did possess a licence to drive heavy goods vehicle, but no endorsement on the licence to drive a hazardous goods vehicle. On the side of -: 34 :- the claimants, Ex.P-15 was produced, which pertains to respondent No.1. Ex.P-15 reveals that respondent No.1 possessed a driving licence to drive a hazardous goods vehicle for the period from 26/03/2013 to 09/10/2013 which is a period subsequent to the accident. But as on the date of the accident i.e., on 02/07/2012, there was no such endorsement on the licence of respondent No.1. In the circumstances, the Tribunal held that he did not possess a valid driving licence to drive a hazardous goods vehicle on the date of the accident and hence, the insurance company was exonerated from its liability to satisfy the award and the same was fastened on the owner of the oil tanker.
28. In this context, it would be useful to refer to a judgment of a Co-ordinate Bench of this Court of which, one of us (Nagarathna J.) was a member, in the case of Smt. Nandhitha N.S. & another vs. Subramanya P. & others in MFA.No.1716/2017, disposed of on 02/12/2019, wherein on the facts of the said case, this Court held that the insurance company was liable to satisfy the award and seek recovery of the same from the insured. The relevant portion of the said judgment at paragraph Nos.32 to 36 read as under:
-: 35 :-"32. In the instant case, considering the documentary evidence on record, we find that RW.3/Anandamurthy possessed a licence to drive a transport vehicle as per Ex.R-1 and Exs.R-3 and R- 4 are the certificates to the effect that he had undergone one day refresher course for renewal of licence for the relevant period, but the fact remains that there is no endorsement on the said licence. The question is, merely because there is no endorsement to drive a transport vehicle carrying goods of dangerous or hazardous in nature, would it amount to RW.3/the driver, in the instant case, not having an effective driving licence. In other words, was he not duly licenced or lacked the skill and therefore, was not qualified to drive such a licence? In this regard, we would like to consider the matter in light of the provisions of law as stated in Section 14 read with Rule 9 of the Rules and thereafter, the facts of the present case.
33. When we consider the requirement of possessing a licence to drive a transport vehicle carrying dangerous or hazardous nature, what are necessary to be complied with, as already noted above are, the requirements which are stated in Rule 9. Once the requirements of Rule 9 are satisfied, an application must be made to seek an endorsement on the driving licence and the endorsement is made by the concerned licensing authority authorizing to drive such a vehicle is granted. Therefore, there can be no two views in the matter that the requirements as stipulated in Rule 9 of the Rules must be mandatorily complied with for the purpose of making an application to -: 36 :- get an endorsement on the driving licence. There cannot be any deviation nor any exemption from the said requirements, but once the requirements have been fulfilled, then the only remaining requirement is, to make an application to the concerned licensing authority to seek an authorization in the form of an endorsement. In the instant case, we find that RW.3/Anandamurthy driver of the offending vehicle had complied with all the requirements under Rule 9 of the Rules. But there was no endorsement made in the driving licence at the relevant point of time.
34. Further, when it comes to the renewal of driving licence, it is noted that the condition precedent is that the driver has to undergo a refresher course, which requirement is also complied with by the driver of the offending vehicle, in the instant case. Merely because there is no endorsement on Ex.R-1, can it be said that the driver of the offending vehicle did not possess the skill or did not have the eligibility to drive the vehicle in question? We do not think that such a view could be taken in the instant case as we find that the driver of the offending vehicle did possess the licence to drive a transport vehicle as on the date of accident. He had also undergone the requisite one day refresher course, which is a mandatory requirement for the renewal of a licence to drive a transport vehicle carrying dangerous and hazardous nature. Thus the driver had acquired the skill to drive the offending vehicle in the instant case. The only thing which is absent in Ex.R-1 is there is (no renewal of the driving licence to drive -: 37 :- the transport vehicle carrying goods of hazardous in nature) no endorsement, which was made on the driving licence. But, by that, it cannot be said that the driver of the vehicle lacked skill or the eligibility to drive the vehicle in question i.e., a transport vehicle carrying goods dangerous and hazardous in nature. In other words, there is no endorsement to the effect that there was renewal of the licence for a period of one year after although the driver of the vehicle had undergone one day refresher course on 03/03/2013 (Ex.R-3). What is pertinent to note in the instant case is that the conditions precedent for securing renewal of licence of the driving licence to drive a transport vehicle carrying dangerous or hazardous nature had been complied by RW.3 as there cannot be any exemption from complying with such conditions. But, once the said conditions have been complied with, merely because there is no endorsement on the driving licence it would not mean that the driver of the vehicle in question was not authorized to drive the same in the context of not having the skill to drive such a vehicle. In the circumstances, while we are in full agreement with what has been contended by the learned counsel for the respondent/insurer insofar as the mandatory requirements of proviso to Section 14(2)(a) read with Rule 9 of the Rules are concerned, at the same time, when we apply the same to the facts of the present case, we find that we cannot take an extreme view by holding that because there was no endorsement on Ex.R-1 would imply that the driver in the instant case did not have nor possessed the skill or the ability or for that matter, the qualification to drive the transport -: 38 :- vehicle in question which was meant to carry goods of dangerous or hazardous nature.
35. In the above context, we have perused the oral evidence on record. As already noted, RW.1 is the owner of the vehicle and the insured who has produced Exs.R-1 to R-4 in his examination-in-chief and there is nothing incriminating which has been elicited in his cross-examination. RW.2 is Ashwaq Ahmed, RTO, Yeshwanthpur, Bengaluru, who has also spoken about the requirements of a valid driving licence to drive a transport vehicle meant for carrying hazardous or dangerous goods as referred to above. RW.3/driver of the offending vehicle has also stated that he possessed a driving licence to drive the heavy goods vehicle from the year 2010 onwards and that he also stated in his examination-in-chief that he had undergone the refresher course, which is as per Exs.R-3 and R-4. In his cross-examination, he stated that he had paid a sum of Rs.700/- as fee for the training for the refresher course and he had received the certificates from the office of the RTO at Yeshwanthpur.
36. RW.4 is the ARTO of Indiranagar, who, in his cross-examination, has categorically stated that as per Ex.R-1, the driver of the offending vehicle had licence to drive a heavy goods vehicle. That Exs.R- 3 and R-4 are the certificates issued to the driver of the offending vehicle for having undergone refresher training course for a day i.e., as stipulated. He also admitted that without certificates like Exs.R-3 and R-4, the driver cannot -: 39 :- be permitted to drive a hazardous goods vehicle. He also admitted that Exs.R-3 and R-4 should be shown to the RTO Authorities for an endorsement within a particular time. The said evidence would indicate that once the certificates of undergoing training refresher course is issued, no time is fixed under the Act or in the Rules for making an application seeking an endorsement on the driving licence so as to obtain authorization to drive a transport vehicle meant for carrying hazardous or dangerous goods. In the instant case, as already noted, there is no such endorsement issued on Ex.R-1, but we have already noted that though there is no such endorsement issued on Ex.R-1, the other conditions required for seeking such an endorsement were fulfilled by the driver of the offending vehicle RW.3 in the instant case. Therefore, we think that this is not a case where there can be an exoneration of the insurance company from its liability to satisfy the award. At the same time, as we have stated that the object and purpose of seeking endorsement on the driving licence after complying with Rule 9 of Rules and the proviso to Section 14(2)(a) of the Act is to seek authorization to drive a transport vehicle meant for carrying hazardous or dangerous goods, we cannot also ignore the importance of such an authorization. For seeking such an authorization, it is necessary to make an application and get an endorsement on the driving licence. The object and purpose of an endorsement on a driving licence to make a public declaration that the holder of such a licence is authorized to drive the said vehicle namely, a transport vehicle meant for -: 40 :- carrying dangerous or hazardous goods is in the instant case. But merely because there is no authorization or public declaration in the instant case, it cannot be held that the driver did not possess the skill or qualification to drive such a vehicle, but there was no declaration of the same on the driving licence by way of an endorsement. Hence, in the instant case, we hold that the insurance company is liable to satisfy the award and seek recovery of the same from the insured. The reason why we are stating so is on account of the fact that there is an absence of the endorsement on the driving licence, but there is compliance of all the conditions required for making an application to seek such an endorsement under the Act as well as under the Rules. Hence, point No.1 is answered accordingly by reversing the finding of the Tribunal."
The observations made in the aforesaid judgment are squarely applicable in the present case.
29. That apart, recently, a Full Bench of this Court has opined as under:
Per Phaneendra J.,
60. Therefore, sub Section (4) and (5) of Section 149 of the Act are enumerated as special contingencies where the statute itself provides the insurer to recover the amount paid under the award by it from the insured. Apart from that, the apex Court has observed that, under Section 149(2) of the Act, despite the defence taken by the -: 41 :- insurer so far as the fundamental breach of conditions are concerned, then also the Tribunal can order for 'pay and recovery'. But, it all depends upon the facts and circumstance of each case, where the Tribunal has to consider each and every circumstances of a case before passing such an order of 'pay and recovery'.
61. In this background, this Court has to understand what is meant by 'fundamental breach' and what is meant by 'violation of other contractual conditions of the policy' and what is meant by 'main purpose'. Now, we would like to discuss the aforesaid points.
62. It is worth reiterating here that the insurance policy between the insurer and insured is a contract which is purely binding upon the parties to the contract. The parties on a consensus can enter into any type of legal agreement between themselves which is recognized as a valid contract.
On an offer and acceptance of consideration, if the contract is entered into between the parties, it will create a binding contract between the parties. Under the provisions of the Act, the policy should contain all the statutory liabilities of the insurer irrespective of other conditions that may be agreed upon by the parties incorporated in the contract. So far as on "Act policy" is concerned, or a policy which should contain the statutory liabilities and requirements there is no problem in interpreting the same, because the statute itself imposes the liability on the insurer to incorporate those legal requirements as per the provisions of the Act.
-: 42 :-Apart from incorporating those requirements, the Insurance Company may also incorporate other conditions which are legally recognized under Section 147 (2) of the Act. Therefore, it goes without saying that the contract of insurance may contain conditions as recognized under Section 147 (2) of the Act and any other conditions which are mutually agreed upon by the parties.
63. In this background, it can be safely understood that the policy of insurance may also contain conditions otherwise than the conditions which are recognized under Section 147 (2) of the Act. But breach of only those conditions, which are recognized under Section 149(2) of the Act, can be permitted to be raised by the insurer against third parties. The other conditions though incorporated in the insurance policy cannot be pressed into service in order to resist a claim before the Tribunal because the other conditions, even though mutually agreed upon between the parties, can only be enforced between the insurer and the insured but it will not have any effect so far as the third parties are concerned. So, those conditions which are within the statutory purview of Section 149 (2) of the Act are considered as defendable conditions by the insurer. However, all those conditions can be enforced between the insurer and insured inter se exclusively between themselves if they are not void or voidable at the instance of the said parties.
64. Once there is breach of any of the conditions of the policy and the conditions are -: 43 :- recognized under Section 149(2) of the Act, still the legal aspect remains, whether breach of those conditions are recognized under Section 149(2) as fundamental breach i.e., whether the particular breach can be called as a breach which has contributed to the cause of accident. In this regard, main purpose rule will have to be also borne in mind. Therefore, we have to understand the concept of fundamental breach in this regard. After going through various provisions of the Contract Act, it can be safely said that, when a party having a duty to perform a contract, fails to perform that duty or does an act whereby the performance of the contract by the other become impossible or, if a party fails to do or refuses to perform the contract, there is said to be a breach of contract on his part. On there being a breach of conditions by one party, the other party is discharged of his obligation to perform his part of the obligation. But, breach of contract of an insurance policy by one party does not discharge the other party to the contract and thereby automatically does not terminate the obligation towards an innocent party, if an innocent party dies or sustains injury or damage due to such breach by the insured. Though the primary obligation of the parties to the contract is determined but the indemnifying party becomes liable for payment of compensation to the third party. However, law also permits the insurer to waive the defective performance or any breach and elect to pay the damages instead of avoiding the contract due to a special reason or special agreement with the insured. Therefore, the breach of contract may be -: 44 :- either actual, i.e., non-performance of the contract on due date of performance, or anticipatory, i.e., before due date of performance is given. Thus, when the party to the contract refuses to do an act or does any act at the time of performance of the contract contrary to the agreed terms, then it is said to be the actual breach of the contract but when the party to the contract refuses to do an act or does an act before the time for performance by the parties of contract, such breach is termed as an anticipatory breach of contract.
65. The above are general concept of breach of contract. But, in the context of fundamental breach of a contract of insurance, it is necessary to explain the expression fundamental breach with reference to the Act. Of course, insurance companies would not draw up a separate contract with every individual but they will prepare a standard form contract containing various conditions whereby a standard form with a large number of terms and conditions are imposed on the insured, restricting the liability of the insurer to the contract. Therefore, the individual can hardly bargain with the insurers which are mighty organizations and third parties may also suffer due to such conditions. Thus, the only option available to the insured is either to accept or reject the terms of insurance except what are stipulated in Section 147 of the Act.
66. The doctrine of fundamental breach in law of contract is developed mainly in the areas of bailment and carriage and also in motor vehicle -: 45 :- insurance in order to protect innocent parties particularly persons who suffer injury or death due to the accidents and preventing exploitation of claimants and denying justice to them. This is as per the intention of the Parliament in enacting the Motor Vehicles Act. Ascertainment of fundamental breach is a method innovated for controlling unreasonable consequences of innumerable conditions and sweeping exemption clauses in the policies. The law makers have introduced Section 149 (1) and (2) of the Act, perhaps in order to avoid the above said mischief that may be caused to the third party sustaining injuries and third party death in any motor vehicle accident. Therefore, if the conditions which are incorporated in the policies, do not fall under any one of the categories recognized under Section 149 (2) of the Act, those conditions cannot be said to be the conditions which can be defendable by the Insurance company before the Court of law. Thus, the breach of those conditions which are specifically recognized under the said section and further, particularly the breach of those conditions which are referable to the cause of accident only, can be called as fundamental conditions and breach of those conditions amount to fundamental breach of conditions. Therefore, the intention of the Parliament is very clear indicating that whatever may be the breach of conditions recognized under Section 149 (2) of the Act, if breach of those conditions has no connection with the cause of accident, such breach cannot be called as fundamental breach. Therefore, a mere breach of any condition, even if it falls under Section 149 (2) -: 46 :- of the Act but which is not responsible for the cause of accident, in such an eventuality, the insurance company cannot absolve itself from its liability because under the doctrine of indemnity, the insurer is liable to reimburse the awarded amount to the insured.
67. The point can be further simplified by observing that, if a fundamental breach of a condition has occurred which is the cause for the accident or the incident and such breach is successfully proved to the satisfaction of the Courts by the insurer, even as per the guidelines in Swaran singh's and Shamanna's case noted above, the courts have the discretionary power to direct the insurance company to pay the compensation and recover the same from the owner so far as third parties are concerned. It is also made clear that the principles enunciated in Swaran Singh's case are not applicable to cases otherwise than those of third parties.
xxxxx
70. In the aforesaid background, the main purpose rule is also to be examined by the Court. The object of the enactment of the Motor Vehicles Act and the purpose of specifically having provisions, namely Sections 146, 147 and 149 (1) and 149(2) in the Act have to be understood by the Court with reference to what exactly the intention of the Parliament is and what was the purpose of introducing the said provisions. The main purpose rule is considered by the apex Court in Skandia Insurance Co. Ltd. V. Kokilaben -: 47 :- chandravadan, reported in (1987) 2 SCC 654 wherein the apex Court considering the breach of a condition of policy at the time of the accident. In the said case, The person who had been driving the vehicle was not duly licenced person to drive the vehicle, though the insured had engaged a licenced driver and had entrusted the vehicle for being driven to the licenced driver. It was contended that when the accident occurred, when an unlicenced person was driving the vehicle, whether it would exonerate the liability of the insurance company. Applying the main purpose rule, the apex Court held that, it would not exonerate the insurance company. The apex Court held as under:
"13. 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 as the Legislature insisted on a person using a motor vehicle in a public place to insure against third party risks by enacting sec. 147. Surely the obligation has not been imposed in order to promote the -: 48 :- business of insurers engaged in the business of automobile insurance. The provision has been inserted in order to protect the members of the community traveling in vehicles or using the roads from the risk attendant upon the user of motor vehicles on the roads."
71. The decision can be meaningfully understood in that, the protection to innocent third parties would remain a protection merely on paper unless there is a guarantee under the statute. It is trite that compensation awarded by the Courts would be recoverable from the persons held liable for the occurrence of the accident. A Court can only pass an award or decree; it cannot ensure that such award or decree results in the amount being actually recovered from the persons liable who may not have the resources. Therefore, the exercise undertaken by the law and the Courts would then be an exercise in futility and the outcome of the legal proceedings, which by the very nature of things involve time and money invested from the scarce resources of the community would make a mockery of the injured victims, or the dependents of the deceased victim in the accident, who are themselves obliged to incur considerable expenditure of time, money and energy in litigation. To overcome this despicable situation, the Parliament has made it obligatory that no motor vehicle shall be used unless a third party insurance is in force (Section 145 of the Act).
-: 49 :-72. Therefore, the main purpose recognized under the statute is that no third party should suffer despite breach of any condition in the insurance policy between insurer and insured. Though such breach of condition is proved by the insurer against the insured, it should be treated as an inter se dispute between the insurer and the insured and the same should not affect the right of a third party, unless, there is a contribution by the third party himself in causing the breach of any condition of the policy. This is the main object and purpose of the Act and the provisions of the Act under consideration. Therefore, the purpose for which the conditions have been imposed in the policy as recognized under Section 149 (2) of the Act and the breach of those conditions are to be tested, as to, whether, the breach is referable to the cause of the accident so as to exonerate the insurer. If not, any condition imposed in the policy and breach of such a condition will not exonerate the Insurance Company so far as a third party risk is concerned. Thus, the first main test, if on ascertaining breach of a condition in the policy by the Court as to, whether the said breach is referable to the cause of accident in which case it would become a fundamental breach, then, the second test would be, whether, the victim or third party, in any manner contributed or was responsible for such breach of the condition by the insured and only thereafter, the Courts have to examine whether the Insurance Company could be directed to pay the compensation and recover from the insured or be completely absolved of its liability. This is how we understand the -: 50 :- expressions regarding "fundamental breach" and main purpose rule."
Per Nagarathna J., "32. Section 149(2)(a) of the Act was a subject of interpretation by the Hon'ble Supreme Court in Swaran Singh. In the said case, the question, as to, whether, an insurer can avoid its liability in the event it raises a defence as envisaged under sub-section (2) of Section 149 of the Act was considered. Specifically, in the said case, the defences in clause (a) of sub-section (2) of Section 149 were considered and regard having to the words "that there has been a breach of specific condition of a policy", in clause (a), would imply that the defence of the action for compensation would depend upon the terms of the policy. The said case focused on the defence of a person driving a motor vehicle not being duly licensed or who has been disqualified from holding or obtaining a driving licence during the period of disqualification. It was observed that a breach on the part of the insured must be established by the insurer to show that not only the insured used or caused or permitted to use the vehicle in breach of the Act, but also that the damage suffered by the victim flowed from the breach. The question, whether, a third party victim of an accident would be entitled to recover the amount of compensation granted by the Tribunal although the driver of the vehicle at the relevant point of time did not have a valid driving licence from the owner or the driver or insurer thereof was considered. In that regard, it -: 51 :- was observed that a contract of insurance and its terms must be gathered from the expressions used therein. It was observed that on a holistic consideration of Section 149 of the Act, the conclusion that could be arrived at was, once the insured proved that the accident was covered by compulsory insurance clause, it was for the insurer to prove that it came within an exception clause. In other words, the person who alleges breach must prove the same. The Insurance Company was therefore, required to establish the said breach by cogent evidence and in the event the Insurance Company failed to prove that there had been breach of conditions of policy on the part of the insured, the Insurance Company could not be absolved of its liability. Noting that the Act is a beneficial statute, it was observed that the liability of the insurer vis-à-vis a third party is a statutory one and hence, the liability to satisfy the decree passed in favour of a third party is also statutory in nature.
xxxxx
34. On a reading of the same, it becomes clear that the Hon'ble Supreme Court has laid down two tests. The breach of a policy condition, for example, by disqualification of the driver to hold a driving licence or invalid driving licence has to be proved to have been committed by the insured for avoiding liability by the insurer. In other words, in order to avoid the 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 policy -: 52 :- regarding use of the vehicle by a duly licensed driver or one who was not disqualified to drive at the relevant time. Thus, burden of proof of establishing breach on the part of the owner of the vehicle is on the Insurance Company. The above is the first test laid down by the Hon'ble Supreme Court. Then, there is another test enunciated. Even after proving breach of a policy condition regarding a valid licence by the driver or his qualification to drive during the relevant period on the part of the insured, the insurer would not be allowed to avoid his liability towards the insured unless the said breach or breaches is/are so "fundamental" as found to have contributed to the cause of the accident. This is having regard to the "rule of main purpose" or "main purpose rule" i.e., even if there is a proof of the driver of a motor vehicle not being duly licenced at the time of the accident, the said fact must be a cause for the accident. In other words, the breach was so fundamental as to have contributed to the cause of the accident. The doctrine of fundamental breach has been incorporated in Section 149 of the Act by the Hon'ble Supreme Court in order to give effect to the main purpose rule. Thus, the exclusion clause or the defence of an insurer so as to avoid liability has been read down to the extent to which it is inconsistent to the main purpose of the contract. The above is the second test to be applied. Thus, there has to be a finding of fact, as to, whether, the owner or the insured had taken reasonable care. Hence, the Tribunal will have to decide the dispute, as to, whether, the insurer has proved its defence. While adjudicating the said -: 53 :- claim if the Tribunal concludes that the insurer has satisfactorily proved its defence in accordance with Section 149(2)(a) of the Act, 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 as per the award of the Tribunal having regard to the mandate of section 149(1) of the Act.
xxxxx
36. Thus, on a reading of Section 149, it becomes clear that when third party risks are involved or when the victim of the accident is a third party, such risk being compulsorily covered under sub-section (1) of Section 147, any exclusion in the policy must be suitably interpreted having regard to the main purpose for which an insurance contract is entered into. In Swaran Singh the Hon'ble Supreme Court has enumerated the aforementioned twin tests in the above context. It is only when both the tests are satisfied that the insurer could be permitted to pay and recover from the insured as per the proviso to sub-section (4) of Section 147 otherwise, no pay and recovery order could be made and the insurer has to satisfy the award.
37. Thus, what follows is that, in regard to third party rights, the insurer can defeat such rights under Section 149(2)(a) by proving a breach of the condition of the policy and further, proving that the same is a fundamental breach. In such an event, the insurer can only mitigate its liability and the insured would be liable to satisfy the judgment -: 54 :- vis-à-vis the insurer who would have satisfied the claim of the third party in the first instance. Therefore, the insurer cannot defeat a third party claim by any exclusion in the policy having regard to the four corners of Section 149(2)(a). It can only mitigate its liability by seeking recovery from the insured on proof of the exclusion clause as per the twin tests enumerated by the Hon'ble Supreme Court. This is the object of Section 149 (4) and the proviso thereto which contemplates pay and recovery order to be made against the insurer who has been notified in a claim proceeding instituted by a third party under Section 149(1) of the Act.
xxxxx
56. In this context, it would be useful to emphasise on the non-obstante clause in Section 149(1) of the Act. The expression "notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall subject to the provisions of this section 149, pay to the person entitled to the benefit of the decree, any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor in respect of the liability....." are significant. The use of the non-obstante clause in Section 149(1) is in order to override the principles of the general law of contract in as much as even if the insurer could avoid or cancelled the policy, nevertheless has to satisfy the judgment or decree as if it were the judgment debtor of the liability. Thus, the use of non-obstante clause as a legislative device by the Parliament under Section 149(1) of the Act must be given its full and -: 55 :- complete intended meaning which is an overriding effect. When such a meaning is given, it becomes clear that, even in a case where an insurance policy is rendered void or cancelled by the insurer, then also, the insurer has to pay the third party victim who is the beneficiary of an decree or award, the sum not exceeding the sum assured payable thereunder as if it were the judgment debtor in respect of the liability. On such payment been made, the insurer can recover from the insured as the liability of the insured covered under the policy would have been discharged by the insurer. In case the payment exceeds the amount for which the insurer was liable, it shall be entitled to recover the excess from the insured. Thus, sub-section (4) and (5) of Section 149 have to be read in conjunction with the non-obstante clause in Section 149(1) of the Act. Thus, even in a case where the policy is void or cancelled by the insurer nevertheless its liability under the policy would have to be make good under Section 149(1) of the Act subject to recovery from the insured. In other words, the avoidance of liability under the policy or cancellation of the policy by the insurer under general law of contract and in terms of the policy cannot absolve the insurer to satisfy judgment and award by the tribunal or court. Having regard to non-obstante clause under Section 149(1) of the Act, the insurer would have to pay to the innocent third party victim or family members of the deceased or the injured person and seek recovery from the insured."
xxxxx -: 56 :- Ultimately the Full Bench answered the questions referred to therein as under:
"ORDER OF THE COURT Questions referred:-
I) If it is shown the insurance policy is not 'Act' policy in terms of Sections 145 and 147 of the Motor Vehicles Act, but a contractual policy issued collecting extra premium indicating insurance company has enlarged its liability, will not the insurance company be liable to pay and recover even if there is any breach by the insurer?
II) In such cases, is not the rule to 'pay and recover' applicable in view of the mandate in Section 149, M.V.Act that upon issuance of policy, the insurer is bound to discharge the award as if it were a judgment debtor?
Answers:
i) Having regard to Section 149(1) r/w Section 149(7) whenever a case falls under Section 149(2)(a) and the same is successfully established or proved by the Insurance Company, as per the twin tests laid by the Hon'ble Supreme Court in Swaran Singh, nevertheless, the insurer or Insurance Company is liable to satisfy the award vis-à-vis a third party and is entitled to recover from the insured. This is irrespective of, the policy being an Act policy in terms of Section 147 pertaining to compulsory coverage of risks of third parties and other classes of persons stated therein or a policy covering other risks by specific contract being entered into in that regard and where -: 57 :- additional premium is paid by the insured i.e., a contractual policy.
ii) The Insurer is liable to pay the third party and recover from the insured even if there is breach of any condition recognized under Section 149 (2), even if it is a fundamental breach (that is breach of condition which is the cause for the accident) and the insurer proves the said breach in view of the mandate under Section 149(1) of the Act. But, no such order can be passed against the insurer, if, on the facts and circumstances of a case, a finding is given by the court that the third party (injured or deceased) had played any fraud or was in collusion with the insured, individually or collectively, for a wrongful gain to themselves or cause wrongful loss to the insurer.
iii) The Court can also fasten the absolute liability on the insurer, if there is any breach of condition which is enumerated under Section 149(2) of the Act or any other condition of the policy if the Insurance Company has waived breach of any such condition or has taken the special responsibility to pay by collecting extra premium by covering any type of risk depending upon facts of each case.
iv) Thus, the rule of pay and recover is applicable in view of the mandate in Section 149(4) of the Act and even if there is a breach of the terms of the insurance policy, the insurer is bound to satisfy the judgment and award as if it were a judgment debtor, even if it satisfies the twin tests -: 58 :- enunciated by the Hon'ble Supreme Court under Section 149(4)(a) of the Act.
v) Before passing any order on the Insurance Company to pay and recover, the Court has to examine the facts and circumstances of each case and if it finds that the victim, injured or the deceased, in a particular case, was solely or jointly responsible for breach of such fundamental condition by playing fraud or in collusion with the insured, the Court may exercise its discretion not to fasten the liability on the insurer.
vi) However, the court should not adopt the above guideline as a general rule in all cases, but only under peculiar facts and circumstances of each case and on giving appropriate reasons.
vii) If the Insurance Company makes out a case under Section 149(2)(b) of the Act, then also the Insurance Company has to satisfy the award so far as third party is concerned, as it is the duty of the Insurance Company to indemnify the insured on the basis of the policy of the insurance and even when the contract of insurance itself is void, nevertheless the liability to indemnify the insured would arise and insurer is entitled to recover from the insured.
viii) Thus, in a case where Section 149(2)(b) applies and the Insurance Company successfully establishes that the policy is void, in such a case also, the insurer is not absolved of its liability to satisfy the judgment or award as rights or obligations would flow even from a policy which is void vis-à-vis third party. In such a case, the -: 59 :- insurer is not completely absolved of its liability, the insured would have to satisfy the award vis-à- vis the third party and recover from the insured the amount paid to the third party and may also have a right to seek damages from the insured.
ix) The judgment of the Division Bench of this Court in Subramanyam, holding that a pay and recovery order cannot be made as there is no liability to pay or satisfy the award or decree in respect of a case falling under Section 149(2) is not correct. Hence, that portion of the judgment in Subramanyam, which states that if the case falls within the scope of Section 149(2) of the Act and the insurer is successful in establishing any of the defences as stated therein, it would be completely absolved of its liability to satisfy the award is also not correct and to that extent, it is held to be bad in law.
x) Article 142 of the Constitution of India being a power granted under the Constitution only to the Supreme Court can be exercised in appropriate cases only by the Apex Court. Exercise of power under Article 142 by the Hon'ble Supreme Court in a particular case cannot be a precedent for other Courts and Tribunals to exercise such a power unless the same is indicated to be a precedent by the Apex Court."
The cumulative effect of the aforesaid dicta is that even if the insurer is able to prove and satisfy the Tribunal or the Court that, the driver of the offending insured vehicle did not possess a valid driving licence as on the -: 60 :- date of the accident by complying with the twin tests enumerated by the Hon'ble Supreme Court in the case of Swaran Singh, nevertheless, having regard to sub-section (1) of Section 149 read with sub-section (7) of Section 149 in the context of sub-section (2) of Section 149, the insurance company is liable to pay the compensation to the innocent third party victims/claimants and recover the same from the insured. The fact that, the Parliament has enacted sub-section (1) of Section 149 of the Act with the non obstante clause is significant, the object and purpose being, innocent third parties victims of road traffic accident ought not to be left in the lurch even if there is a violation of the terms and conditions of the policy as stipulated in the form of defences in sub-section (2) of Section 149 of the Act. Therefore, sub-section (4) of Section 149 of the Act had incorporated what is known as the principle of pay and recover insofar as the insurer is concerned. In the circumstances, the Full Bench, in the operative portion of its Opinion has held as under:
"In the instant case, the appellant -
Insurance Company was directed to discharge its liability, subject to the result of this reference. The vehicle involved in the instant case is a goods vehicle and the injured claimant was travelling in a goods carriage. The Tribunal awarded -: 61 :- compensation of Rs.1,000/- with interest at 6% p.a. from the date of petition till deposit and to recover the same from the insured - respondent No.2 herein. If the appellant - insurer has deposited the amount, it is entitled to recover the said amount from the first respondent - insured, as this is a case which falls under Section 149(2)(a) of the Act as the insured claimant was permitted to travel as a passenger in a goods vehicle namely, tempo.
In the circumstances, the appeal is liable to be dismissed and is dismissed.
Parties to bear their respective costs."
30. Applying the aforesaid ratio and dicta to the present case, since it has been established by respondent No.3/insurer that the driver of the offending vehicle respondent No.1 did not possess a valid driving licence on the date of the accident inasmuch as he did not have an endorsement to drive a hazardous goods vehicle, though he had a valid licence to drive a heavy goods vehicle which is a transport vehicle, respondent No.3/insurer would have to pay compensation to the claimants and recover the same from respondent No.2/owner of the vehicle. The same could be done by executing the judgment of this Court. In the circumstances, point No.1 is answered in favour of the appellants/claimants by modifying the -: 62 :- judgment of the Tribunal by directing respondent No.3/insurer to pay compensation to the appellants/claimants and to recover the same from respondent No.2/owner of the offending vehicle by executing this judgment. Accordingly, point No.1 is answered.
31. This takes us to the next point, which is with regard to the quantum of compensation awarded by the Tribunal in the instant case. Thippeswamy, who died in the accident was working as a conductor in KSRTC bus bearing No.KA-18/F-469 on the date of the accident. He was aged about thirty five (35) years. The relevant multiplier applicable in the instant case having regard to the age of deceased Thippeswamy is '16'. The Tribunal while assessing the quantum of compensation, awarded Rs.24,28,312/- on the following heads:
Loss of Dependency : Rs. 22,53,312/-
Consortium of petitioner No.1 : Rs. 1,00,000/-
Love and affection : Rs. 50,000/-
Transportation of dead body,
cremation and obsequies ceremonies : Rs. 25,000/-
-----------------
TOTAL :- Rs.24,28,312/-
=========
-: 63 :-
32. Thippeswamy was earning a gross salary of Rs.11,886/-, which is evident from his salary certificate at Ex.P-14. A sum of Rs.200/- would have to be deducted from the said salary towards professional tax.
Consequently, the net monthly salary would be Rs.11,686/-. Thereafter, 50% of the said sum has to be added towards future prospects as per the dictum of the Hon'ble Supreme Court in Pranay Sethi. Since there are four claimants who are dependents of deceased Thippeswamy, 1/4th of the said amount and not 1/3rd as has been done by the Tribunal, has to be deducted towards the personal expenses of the deceased as per the dictum of the Hon'ble Supreme Court in Sarla Verma.
Consequently, when the said amount is added, the resultant sum is Rs.13,146/-. By applying the multiplier of 16, the compensation on the head of loss of dependency would be Rs.25,24,032/- (13,146x12x16) instead of Rs.22,53,312/- awarded by the Tribunal.
33. Having regard to the recent dicta of the Hon'ble Supreme Court in Pranay Sethi and Magma Insurance Company Limited, the compensation on the head of loss of spousal consortium to claimant No.1, loss of filial consortium or loss of love and affection to claimant -: 64 :- Nos.2 and 3 and loss of parental consortium to claimant No.4 would have to be re-assessed. Consequently, the re-assessed compensation would be as under:
Loss of dependency : Rs.25,24,032/-
Loss of spousal consortium : Rs. 40,000/-
Loss of love and affection : Rs. 60,000/-
Loss of parental consortium : Rs. 40,000/-
Loss of estate : Rs. 15,000/-
Funeral expenses : Rs. 15,000/-
------------------
TOTAL : Rs.26,94,032/-
==========
The said compensation shall carry interest at the rate of 6% per annum instead of 7.50% as awarded by the Tribunal, as we find substance in the submission of learned counsel for the insurer that normally the Tribunals as well as this Court would award interest at the rate of 6% per annum only. Accordingly, point No.2 is answered in favour of the appellants/claimants.
34. In the result, the appeal filed by the claimants/appellants is allowed in part.
Respondent No.3/insurer is directed to satisfy the award by paying compensation of Rs. Rs.26,94,032/-
with interest at the rate of 6% per annum from the date of claim petition till deposit and further, the insurance -: 65 :- company is entitled to recover the same from respondent No.2/owner of the oil tanker lorry by executing this judgment in accordance with law.
Out of the re-assessed compensation, 40% each of the same shall be apportioned to the widow of the deceased and the minor child and 10% each shall be apportioned to the parents of the deceased.
The entire compensation awarded to the minor child of the deceased shall be invested in any nationalized bank and/or post office deposit until she attains the age of majority.
75% of the compensation awarded to the widow of the deceased shall be invested in any nationalized bank and/or post office deposit for an initial period of ten years and she shall be entitled to draw periodical interest from the said deposit. The balance compensation shall be released to her after due identification.
The compensation awarded to the parents of the deceased shall be released to them after due identification.
-: 66 :-Respondent No.3/insurer shall deposit the compensation amount within a period of six weeks from the date of receipt of certified copy of this judgment.
Parties to bear their respective costs.
Sd/-
JUDGE Sd/-
JUDGE S*