Himachal Pradesh High Court
M/S Northern International Education & ... vs Rita Devi & Ors on 2 January, 2018
Author: Tarlok Singh Chauhan
Bench: Tarlok Singh Chauhan
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA FAO No. 340 of 2017 Reserved on: 26.12.2017 Decided on: 01.01.2018 .
M/s Northern International Education & Research Centre Society ... Appellant Versus Rita Devi & Ors. ... Respondents Coram The Hon'ble Mr.Justice Tarlok Singh Chauhan, Judge.
Whether approved for reporting? Yes For the Appellant: Mr. Sunil Mohan Goel and Mr. Vipul Shardha, Advocates.
For the respondents: Mr. B.M. Chauhan, Advocate, for respondent No. 6.
Justice Tarlok Singh Chauhan, Judge The appellant is the owner of the bus which was involved in vehicular accident leading to the fastening of jointly and severally liability upon the appellant and respondents No. 3 to 5 herein of the award amount of Rs.3,80,000/- alongwith interest at the rate of 7.5% per annum that was passed in favour of the claimants-respondents No. 1 and 2.
2. However, at the first instance, it was the insurance company that was directed to pay the aforesaid amount with the right to recover the same from the appellant.
_________________________ Whether the reporters of the local papers may be allowed to see the Judgment? Yes.
::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 23. Since the question of quantum is not an issue, I would only concentrate on findings rendered by the learned Tribunal on issue No. 4, which reads thus:
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"4. Whether the respondent No. 2 was not holding a valid and effective driving licence at the time of accident?OPR-5"
4. The learned Tribunal answered this issue by according the following reasons:-
"The onus to prove this issue is on the respondent no. 5, but no oral evidence has been led by the respondent no. 5 in support of this issue. However, the respondent no. 5 had filed application under Order 26 Rule 4 CPC for issuance of interrogatories which was not opposed by the opposite parties including the petitioners and said application was allowed by me predecessor vide his order dated 15.03.2014 and request letter was sent to ld. District Judge, Roop Nagar (Punjab) with request to get the statement of licencing clerk of the office of District Transport Officer, Roop Nagar, recorded by appointing a local commissioner. Accordingly on the request of this Tribunal, the local commissioner was appointed by ld. District Judge, Roop Nagar and the said local commissioner has submitted his report dated 06.06.2014. As per this report, the driving licence No. 1581/R/NDL/2000-01 had not been issued in favour of respondent No. 2 Ashok Kumar by the D.T.O. Roop Nagar (Punjab) and as such the driving licence of respondent No. 2 is fake. It means the respondents 1 & 4 the owners of the offending bus have violated the terms and conditions of the insurance policy as the respondent No. 2 was not having valid and effective driving licence to drive the offending bus at the time of accident. Accordingly, this issue is decided in favour of respondent no.5."::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 3
5. It is vehemently argued by Shri Sunil Mohan Goel, learned counsel for the appellant that it is more than settled that insurance company is required to plead and prove something .
more than mere breach of policy and is required to establish by pleading and also by evidence that there has been willful violation or infringement of the policy and would place strong reliance on the judgment of the Hon'ble Supreme Court in National Insurance Co. Ltd. v. Swaran Singh 2004(1) ACJ 1.
6. On the other hand, Shri B.M. Chauhan, learned counsel for respondent No. 6 i.e. Insurance Company after placing reliance on Swaran Singh's case (supra), contend that it was for the owner to have pleaded and prove that he has taken reasonable care to find as to whether the driving licence produced by the driver fulfill the requirement of law and having failed to do so, the insurance company cannot be held liable. He would further contend that in absence of the owner stepping into witness box, an adverse inference would have to be drawn against him under Section 114(g) of the Indian Evidence Act and reliance is placed upon the judgment of Hon'ble Supreme Court in Iswar Bhai C. Patel alias Bachu Bhai Patel vs. Harihar Behera and another 1999 SC 1341 and Vidhyadhar vs. Mankikrao and another 1999 SC 1441.
I have heard learned counsel for the parties and have gone through the records of the case.
::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 47. It would be noticed that the onus to prove issue No. 4 was admittedly upon the insurance company who had been arrayed as respondent No. 5 in the claim petition.
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8. The learned Tribunal has exonerated the insurance company simply on the basis of the application filed by it under Order 26 Rule 4 CPC for issuance of interrogatories, which was duly allowed on 15.03.2014 and request letter was sent to the learned District Judge, Roop Nagar (Punjab) to get the statement of licensing clerk of the office of District Transport Officer, Roop Nagar, recorded by appointing a local commissioner. Accordingly, the local commissioner was appointed by the learned District Judge, Roop Nagar (Punjab) and he submitted his report, in terms whereof the driving licence in question was not found to have been issued in favour of the driver of the bus i.e. Ashok Kumar (Respondent No. 2 in the claim petition) and was found to be fake.
9. It was on the basis of the report of the local commissioner that owner of the offending bus alongwith others were held liable to pay the award amount, as according to the Tribunal the owner had violated the terms and conditions of the insurance policy because the driver engaged by him was not possessed of a valid and effective driving licence at the time of accident. Whatever, however, appears to be ignored by the learned Tribunal is the fact that owner of the vehicle had examined one Raj Singh as RW1, who stated that he had been ::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 5 working as a senior driver with the appellant for the last 10-12 years. He further stated that whenever owner of the vehicle wanted to engage drivers he had subjected them to test and .
respondent No. 2 i.e. Ashok Kumar had also been subjected to test by him. He further stated that respondent No. 2 drove the vehicle to his satisfaction and thereafter he also checked the driving licence which was valid and it was endorsed to drive the bus.
10. Noticeably the insurance company did not cross-
examine this witness on material aspects of the case as would be evident from such cross-examination, which is reproduced in its entirety:-
"I am not owner of the vehicle. I have not brought my appointment letter today. The owner did not himself subject to test to respondent No. 2. I have brought my driving licence. I did not get the driving licence of respondent No. 2 verified from the concerned licensing authority. I do not know that the concerned licensing authority has sent report on interrogatories that no such licence in the name of respondent No. 2 had been issued by them. It is incorrect that at the instance of respondent No. 1 the owner of the bus, I am making false statement. I cannot tell the date and year on which I subjected respondent No. 2 to driving test."
11. As noticed above, both the parties have placed strong reliance upon the three Judges Bench decision of Hon'ble Supreme Court in, Swaran Singh's case (supra), therefore, in order to appreciate what exactly has been laid down in Swaran Singh's case (supra), I would instead of referring to Swaran ::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 6 Singh's case, choose to make a reference to a later judgment of two Judges of Hon'ble Supreme Court in National Insurance Co.
Ltd. vs. Laxmi Narain Dhut (2007) 3 SCC 700, wherein the .
ratio of Swaran Singh's case (supra) has been culled out as follows:
"9. In Swaran Singh's case (supra) on which learned counsel for the parties have placed reliance undisputedly related to a case under Section 149 of the Act. This Court elaborately dealt with the scope and ambit of Sections 147 and 149 of the Act and after tracing the history of compulsory insurance and the rights of the third parties, held that the concerned cases were mainly concerned with third party rights under the policy. It was held in that context that any condition in the policy whereby the right of the third party is taken away would be void, as noted in para 23 of the judgment.
10. In paras 69 and 70 the principles were culled out in the following terms:
"The Insurance Company is required to prove the breach of the condition of the contract of insurance by cogent evidence. In the event the Insurance Company fails to prove that there has been breach of conditions of the policy on the part of the insured, the Insurance Company cannot be absolved of its liability. This Court did not lay down a degree of proof, but held that the parties alleging the breach must be held to have succeeded in establishing the breach of the condition of the contract of insurance, on the part of the Insurance Company by discharging its burden of proof. The Tribunal, must arrive at a finding on the basis of the materials available on the records".::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 7
19. The primary stand of the insurance company is that the person driving the vehicle did not have a valid driving license. In Swaran Singh's case (supra) the following situations were noted:
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(i) the driver had a license but it was fake;
(ii) the driver had no license at all;
(iii) the driver originally had a valid license but it had expired as on the date of the accident and had not been renewed;
(iv) the license was for a class of vehicles other than that which was the insured vehicle;
(v) the license was a learner's license.
Category (i) may cover two types of situations. First, the license itself was fake and the second is where originally that license is fake but there has been a renewal subsequently in accordance with law."
12. However, the moot question is what exactly is the ratio of Swaran Singh's case (supra) judgment so far as the subject matter of the instant petition regarding fake driving licence is concerned, the complete answer to this question is found in a subsequent judgment of the Hon'ble Supreme Court in Pepsu Road Transport vs. National Insurance Company 2013(10) SCC 217, wherein it was held as under:
5.Though the appellant is entitled to succeed on the ground that the insurer had not proved beyond doubt that driver Nirmal Singh did not possess a valid driving licence, we shall also advert to the legal position regarding the liability of the insurance company when the driver of the offending vehicle possessed a fake driving licence.
6. In United India Insurance Company Limited vs. Lehru and Others, 2003 3 SCC 338 a two-Judge Bench of this Court has taken the view that the insurance company cannot be permitted to avoid its liability only on the ground that the person driving the vehicle at the time of accident was not ::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 8 duly licensed. It was further held that the wilful breach of the conditions of the policy should be established. Still further it was held that it was not expected of the employer to verify the genuineness of a driving licence from the issuing authority at the time of employment. The employer needs .
to only test the capacity of the driver and if after such test, he has been appointed, there cannot be any liability on the employer. The situation would be different when the employer was told that the driving licence of its employee is fake or false and yet the employer not taking appropriate action to get the same duly verified from the issuing authority.
7. We may extract the relevant paragraphs from the judgment:
"18. Now let us consider Section 149(2). Reliance has been placed on Section 149(2)(a)(ii). As seen in order to avoid liability under this provision it must be shown that there is a "breach". As held in Skandia and Sohan Lal Passi cases the breach must be on part of the insured. We are in full agreement with that. To hold otherwise would r lead to absurd results. Just to take an example, suppose a vehicle is stolen. Whilst it is being driven by the thief there is an accident. The thief is caught and it is ascertained that he had no licence. Can the Insurance Company disown liability? The answer has to be an emphatic "No". To hold otherwise would be to negate the very purpose of compulsory insurance. The injured or relatives of the person killed in the accident may find that the decree obtained by them is only a paper decree as the owner is a man of straw. The owner himself would be an innocent sufferer. It is for this reason that the Legislature, in its wisdom, has made insurance, at least third party insurance, compulsory. The aim and purpose being that an insurance company would be available to pay. The business of the company is insurance. In all businesses there is an element of risk. All persons carrying on business must take risks associated with that business. Thus, it is equitable that the business which is run for making profits also bears the risk associated with it. At the same time innocent parties must not be made to suffer or loss. These provisions meet these requirements. We are thus in agreement with what is laid down in aforementioned cases viz that in order to avoid liability it is not sufficient to show that the person driving at the time of accident was not duly licensed. The insurance company must establish that the breach was on the part of the insured."
"20. When an owner is hiring a driver he will therefore have to check whether the driver has a driving licence. If the driver produces a driving licence which on the face of it looks genuine, the owner is not expected to find out whether the licence has in fact been issued by a competent authority or not. The owner would then take the ::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 9 test of the driver. If he finds that the driver is competent to drive the vehicle, he will hire the driver. We find it rather strange that insurance companies expect owners to make enquiries with RTOs, which are spread all over the country, whether the driving licence shown to them is valid or not. Thus where the owner has satisfied himself that the .
driver has a licence and is driving competently there would be no breach of Section 149(2)(a)(ii). The Insurance Company would not then be absolved of liability. If it ultimately turns out that the licence was fake, the insurance company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive. More importantly, even in such a case the insurance company would remain liable to the innocent third party, but it may be able to recover from the insured. This is the law which has been laid down in Skandia, Sohan Lal Passi and Kamla cases. We are in full agreement with the views expressed therein and see no reason to take a different view."
8. The matter was subsequently considered by a three-Judge Bench of this Court in National Insurance Company Limited vs. Swaran Singh and Others, 2004 3 SCC 297. The said Bench was of the view that in case the insured did not take reasonable and adequate care and caution to verify the genuineness or otherwise of the licence, the liability would still be open-ended and will have to be determined on the basis of facts of each case. The relevant discussions are available at paragraphs 92, 99, 100 and 101, which are extracted below:
"92. It may be true as has been contended on behalf of the petitioner that a fake or forged licence is as good as no licence but the question herein, as noticed hereinbefore, is whether the insurer must prove that the owner was guilty of the wilful breach of the conditions of the insurance policy or the contract of insurance. In Lehru case, the matter has been considered in some detail. We are in general agreement with the approach of the Bench but we intend to point out that the observations made therein must be understood to have been made in the light of the requirements of the law in terms whereof the insurer is to establish wilful breach on the part of the insured and not for the purpose of its disentitlement from raising any defence or for the owners to be absolved from any liability whatsoever."
"99. So far as the purported conflict in the judgments of Kamla and Lehru is concerned, we may wish to point out that the defence to the effect that the licence held by the person driving the vehicle was a fake one, would be available to the insurance companies, but whether despite the same, the plea of default on the part of the owner has ::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 10 been established or not would be a question which will have to be determined in each case."
"100. This Court, however, in Lehru must not be read to mean that an owner of a vehicle can under no circumstances have any duty to make any enquiry in this .
respect. The same, however, would again be a question which would arise for consideration in each individual case."
"101. The submission of Mr. Salve that in Lehru case, this Court has, for all intent and purport, taken away the right of insurer to raise a defence that the licence is fake does not appear to be correct. Such defence can certainly be raised but it will be for the insurer to prove that the insured did not take adequate care and caution to verify the genuineness or otherwise of the licence held by the driver."
9.Swaran Singh's case was subsequently considered by a two- Judge Bench of this Court in National Insurance Company Limited vs. Laxmi Narain Dhut, 2007 3 SCC 700 . It was explained that:
r "110.(iii)...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 "
10. In a claim for compensation, it is certainly open to the insurer under Section 149(2)(a)(ii) to take a defence that the driver of the vehicle involved in the accident was not duly licensed. Once such a defence is taken, the onus is on the insurer. But even after it is proved that the licence possessed by the driver was a fake one, whether there is liability on the insurer is the moot question. As far as the owner of the vehicle is concerned, when he hires a driver, he has to check whether the driver has a valid driving licence. Thereafter he has to satisfy himself as to the competence of the driver. If satisfied in that regard also, it can be said that the owner had taken reasonable care in employing a person who is qualified and competent to drive the vehicle. The owner cannot be expected to go beyond that, to the extent of verifying the genuineness of the driving licence with the licensing authority before hiring the services of the driver. However, the situation would be different if at the time of insurance of the vehicle or thereafter the insurance company requires the ::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 11 owner of the vehicle to have the licence duly verified from the licensing authority or if the attention of the owner of the vehicle is otherwise invited to the allegation that the licence issued to the driver employed by him is a fake one and yet the owner does not take appropriate action for .
verification of the matter regarding the genuineness of the licence from the licensing authority. That is what is explained in Swaran Singh's case . If despite such information with the owner that the licence possessed by his driver is fake, no action is taken by the insured for appropriate verification, then the insured will be at fault and, in such circumstances, the insurance company is not liable for the compensation.
13. Thus, what can be taken to be settled law to it is that undoubtedly it is the insurer to take defence that the driver of the vehicle involved in the accident was not duly authorized and once such defence is taken onus is on the insurer. But even after it is proved that the licence possessed by the driver was fake one, particularly, when the owner of the vehicle has satisfied himself as to the competence of the driver is also having a valid driving licence, then owner cannot be expected to go beyond to verifying the genuineness of the driving licence before the licensing authority before hiring the services of the driver.
14. Reverting back to the facts of the case, it has specifically come in evidence of RW-1 that he on behalf of owner has satisfied himself regarding not only the skill but also regarding the validity of the licence possessed by the driver.
15. However, at this stage, Shri B.M. Chauhan, learned counsel for the insurance company would vehemently argue that the statement of RW-1 cannot be taken into consideration as he is not the owner of the vehicle.
::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 1216. I do not find any merit in this contention but find the same to be rather fallacious. Admittedly, the owner of the vehicle is a Society and being a jurisdic could not have obviously .
appeared in the witness box, it is only through authorized person that such owner could put in appearance. It is for this precise reason, the owner examined RW-1 whose authority as would be noticed from the cross-examination as extracted above to depose was never questioned by the insurance company. Therefore, there is no question of drawing an adverse inference against the appellant.
17. It was then argued by Shri B.M. Chauhan, learned counsel for the insurance comply that the owner of the vehicle cannot lead evidence beyond its pleadings as no plea has been raised by the appellant that he had satisfied himself about the genuineness and the skill of the driver.
18. This contention is equally fallacious for the simple reason that the claim petition was filed by the claimants against the owner alongwith others including the insurance company.
What was required of the owner of the vehicle was to have controverted the allegations, if any, that was set out against him.
There was no occasion much less a right in favour of the appellant to have while answering the claim petition set-up a plea as aforesaid, more particularly, when it was not even the case set-up by the claimants.
::: Downloaded on - 02/01/2018 23:28:14 :::HCHP 1319. In view of the aforesaid discussion, I find merit in this appeal and accordingly the finding on Issue No. 4 are set aside and decided against respondent No. 5.
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20. Viewed thus, the learned Tribunal has fallen in error in discharging the insurer from its liability. Accordingly, the appeal is allowed and the impugned award is modified and the insurance company is directed to satisfy the award.
(Tarlok Singh Chauhan), Judge.
January 1, 2018 sanjeev ::: Downloaded on - 02/01/2018 23:28:14 :::HCHP