Jammu & Kashmir High Court
National Insurance Co. Ltd. vs Abdul Gaffar Pandith on 11 August, 2004
Equivalent citations: 2005(2)JKJ260
Author: R.C. Gandhi
Bench: R.C. Gandhi
JUDGMENT S.N. Jha, C.J.
1. This civil miscellaneous appeal is directed against the order of the State Consumers Protection Commission, Srinagar (hereinafter referred to as the Commission) dated 11-7-2001 in Complaint No. 90 of 1998 whereby and whereunder the respondent was held entitled to compensation of Rs. 3,08,500/- for the tanker and Rs. 1,25,211/- for the diesel kept inside with 9% interest per annum. The facts of the case are as follows:
On 23-10-1997, respondent's tanker bearing registration No. JK01-5592 containing diesel met with an accident on Jammu-Srinagar Highway at Khuninalla. The tanker was completely damaged and the diesel wasted. Both the tanker and stock of diesel had insurance cover to the tune of Rs. 4.50 lakhs and Rs. 1,25,221/- respectively. The respondent informed the Divisional Office of the Insurance Company i.e. National Insurance Co. (hereinafter referred to as the appellant). On intimation, the appellant appointed surveyor to verify the incident. Later Surveyors were appointed to assess the quantum of loss. The loss was assessed at Rs. 3,08,500/- and Rs. 1,25,221/- for the diesel. The Divisional Office approved the claim as assessed by the surveyors and sent it to the Regional Office. The Regional Office made certain queries relating to validity of the driving license of the driver about which survey report was silent. The claim was later forwarded to the Head Office. According to the appellant, the surveyors could not verify the validity of the driving license as relevant records of the Jammu Regional Transport Office had been seized by the Vigilance Organization in connection with some investigation. It may be mentioned that the driver of the tanker Gull Mohammad had died in the accident on the spot. As the claim remained pending, the respondent filed complaint before the Commission.
2. The appellant in its response before the Commission did not challenge that the tanker and the diesel was covered under an insurance policy. It also did not challenge the factum of accident or the quantum of loss as assessed by the surveyors. It, however, took the stand that as the driver did not hold a valid license, the respondent was not entitled to any indemnity or compensation. In support of its case, it produced a certificate from the Hyderabad Licensing Authority stating that no license 'No. G/1108/Hyd/80 dated 16-4-1980' had been issued to any Gull Mohammad. According to the respondent, the State Licensing Authority, Jammu on 10-6-1983 renewed the original license after due enquiry. The respondent produced certificate from the Licensing Authority Jammu to that effect and also examined one Hafizur-ur-Rahman, an officer of Regional Transport Office Jammu who deposed that the license issued by the Hyderabad Licensing Authority to Gull Mohammad had been countersigned for heavy motor vehicles by the Assistant Regional Transport Officer, Jammu after confirming first that the license was genuine and then renewed it vide No. 366091/MVB/RTO Jammu, valid up to 7th November, 1998. The respondent thus took the stand that the license having been renewed by a competent authority, its validity can not be disputed.
3. According to the appellant, a fake license can not be transformed into a valid license by so-called renewal even by a competent authority. The Commission accepted the stand of the respondent placing reliance on aforementioned certificate of the Hyderabad Licensing Authority. The Commission also accepted the respondent's case that a fake license is always fake and renewal can not transform it into a valid license. The Commission observed that the contract of insurance inter-alia envisages that the vehicle shall be allowed to be run by a driver having valid license. It, however, took the view that unless breach of such a condition is intentional or with knowledge that the person allowed to drive the vehicle did not hold a valid license, the owner can not be denied compensation under the contract of insurance. Holding that the respondent was not guilty of such breach of contract, he allowed compensation as mentioned above.
4. Mr. Javid Ahmad Kawoosa, counsel for the appellant submitted that as held by the Apex Court in New India Insurance Co. v. Kamla and Ors., AIR 2001 SC 1419, the renewal of a fake driving license can not make it genuine and where the owner of the vehicle allows a person not holding a valid driving license to drive the vehicle, he commits a breach of contract which disentitles him to indemnity and compensation from the insurance company. On behalf of respondent, it was submitted that even in the case of a. fake license, the insurance company is statutorily liable to pay compensation as held in New India Insurance Company v. Kamla (supra) itself. Mr. Kawoosa on behalf of the appellant submitted that the decisions of the Supreme Court have been rendered in the context of Section 149(2) of tile Motor Vehicles Act, 1988, and they deal with the cases of third party claim. The question in the instant case relates to 'own damage' claim and therefore the principle laid down in those decisions of the Apex Court is not applicable.
5. Mr. Kawoosa appears to be right in his submission that the decision referred to above deals with cases of third party claim. As a matter of fact, Section 149 of the Motor Vehicles Act itself deals with third party risk. Mr. Kawoosa also is right in his submission that renewal of a fake driving license can not transform it into a genuine or valid license. A license which is forged like any other like document is to be regarded as non existent in the eye of law. Merely because it gets a new wrapper in the shape of so-called renewal by the competent authority can not inject life into it and make it legal. Thus in case of so-called renewal of a fake driving license, the Insurance Company can not be held liable to pay compensation in respect of motor accident when the vehicle is driven by a person holding such license. That is a breach of term of contract of insurance which disentitles the owner to any kind of indemnity or compensation. This is, however, not the end of the matter. In Skandia Insurance Co. Ltd. v. Kokilaben Chandravandan, AIR 1987 SC 1184, the Apex Court observed that:
"...the expression 'breach' is of great significance. The dictionary meaning of 'breach' is 'infringement or violation of a promise or obligation' (vide Collins English Dictionary). It is, therefore, abundantly clear that the insurer will have to establish that the insured is guilty of an infringement or violation of a promise that a person who is not (sic) duly licensed will have to be in charge of the vehicle. The very concept of infringement or violation of the promise that the expression 'breach' carries within itself induces an inference that the violation or infringement on the part of the promisor must be a willful infringement or violation. If the insured is not at all at fault and has not done anything he should not have done or is not amiss in any respect how can it be conscientiously posited that he has committed a breach? It is only when the insured himself places the vehicle in charge of a person who does not hold a driving license that it can be said that he is 'guilty' of the breach of the promise that the vehicle will be driven by a licensed driver. It must be established by the Insurance Company that the breach was on the part of the insured and that it was the insured who was guilty of violating the promise or infringement of the contract, Unless the insured is at fault and is guilty of a breach, the insurer cannot escape from the obligation to indemnify the insured and successfully contend that he is exonerated having regard to the fact that the promisor (the insured) committed a breach of his promise. Not when some mishap occurs by some mischance. When the insured has done every thing within his power inasmuch as he has engaged a licensed driver and has placed the vehicle in charge of a licensed driver, with the express or implied mandate to drive himself it cannot be said that the insurer is guilty of any breach ......"
6. In the recent case of National Insurance Company Ltd. v. Swaran Singh and Ors., AIR 2004 SC 1531, a three-Judge Bench of the Apex Court has held that breach of policy condition, for example, disqualification of driver or invalid driving license of the driver has to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving license or disqualification of the driver for driving at the relevant time, are not in themselves defence available to the insurer against either the insured or the third parties. To avoid its liability towards 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. Thus the Insurance Company must not only prove, as a part of its defence, that the person driving the vehicle was disqualified or that he did not hold a valid driving license, it is also required to establish that the insured i.e. the owner of the vehicle had made positive breach of the condition. As a matter of fact, the Supreme Court went to the extent of holding that where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid license by the driver or his qualification to drive during the relevant period, "the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches of the condition of driving license is/are so fundamental and bound to have contributed to the cause of the accident."
7. Mr. Kawoosa submitted that the decision was rendered in the context of the third party risk/claim and, therefore, has little relevance in the instant case which relates to own damage claim. It is true that the decisions were rendered in the context of Section 149 of the Motor Vehicles Act 1988, which makes the insurer statutorily liable to indemnify the loss of the insured vis-a-vis third party claims. The question is whether in the case of own damage claim, the legal position would be different. In other words whether disqualification of the driver or the invalidity of the driving license would disentitle the insured/owner to claim/compensation in respect of own damage claim? In our opinion, the legal position in case of own damage claim would be the same as in the case of third party claims. A contract of insurance like any other contract would normally bind only the parties to the contract. If the insured suffers any loss covered by the terms of the contract, the insurer would indemnify him for the amount of such loss. Section 149 of the Motor Vehicles Act is a special provision which seeks to indemnify the loss of the insured in respect of third party risks. It provides that if a judgment or award in respect of any liability covered by certificate of insurance, is obtained against the insured, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, it shall subject to the provisions of the section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable there under, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and interest. Thus if the Insurance Company is liable to indemnify the loss of the insured under a judgment or award against the insured in respect of third party claims, it is not understandable as to why a different yardstick should be adopted in respect of indemnity of own damage claims. No doubt the liability of the insurer and the rights of the insured would be subject to similar conditions. In other words, where the vehicle was driven by a disqualified driver or a driver who did not hold a valid driving license at the relevant time, the Insurance Company would be entitled to take a similar defence of breach of condition to award liability under the Certificate of Insurance.
The insurance company, however, would be required to prove that before authorizing the person concerned to drive the vehicle on his behalf, he had satisfied himself about his status as a duly licensed driver. Thus it would be a question of proof of relevant facts by either party based on circumstances and evidence in a particular case. So far as the legal position is concerned, it would not be different from what has been laid down in the decisions of the Apex Court referred to above. In other words, as held in the recent case of National Insurance Co. v. Swaran Singh (supra) and other cases, the breach of condition on the part of the insured has to be proved as a fact by cogent evidence. It is also to be proved that the breach was wilful and intentional, and that it was so fundamental as to have contributed to the cause of accident. The mere fact that the person concerned was disqualified from driving the vehicle and/or the driving license held by him was not valid, can not per se be an adequate defence to deny compensation to the insured.
8. Coming to the instant case, it is an admitted position that Gull Mohammad had obtained a license from the Licensing Authority, Jammu on 10-6-1983. May be that it was renewal of a fake license but the question is whether allowing him to drive the vehicle amounted to breach of condition on the part of the respondent. Taking the case of the appellant to its logical conclusion, the respondent should have verified from the concerned authorities of Hyderabad about the genuineness and validity of the license purportedly issued to Gull Mohammad. It would, indeed, be a far fetched argument which can not be accepted. In United India Insurance Co. Ltd. v. Lehru, AIR 2003 SC 1292, the Supreme Court observed that when an owner is hiring a driver he is to check whether the driver has a driving license. If the driver produces a driving license which on the face of it looks genuine, the owner is not expected to find out whether the license has in fact been issued by the competent authority or not. The owner may then test his driving skill. If he finds that the driver is competent to drive the vehicle, he is not expected to doubt that the license was not issued by the competent authority. The insurance companies can not expect owners to make enquiries with RTO's spread all over the country, whether the particular driving license shown to them is valid or not. Thus where the owner has satisfied himself that the driver has a license and is driving vehicle competently, even if the license is later found to be fake, the insurance company would remain liable unless it proves that the owner/insured was aware or had noticed that the license was fake but still permitted that person to drive.
9. The instant case stands on a better footing, if we may say so, inasmuch as Gull Mohammad had undisputedly obtained renewal of a 'license'. There is no dispute about endorsement of renewal by the Regional Licensing Authority, Jammu. The dispute is about original license which Gull Mohammad claimed to have obtained from the Licensing Authority of Hyderabad. The respondent was not supposed to go to Hyderabad, make enquiries there to satisfy that the license possessed by Gull Mohammad was genuine or not. As a matter of fact, as seen above, before making endorsement of renewal, reference was made by the Licensing Authority, Jammu to their counterpart at Hyderabad and only thereafter the 'renewed license was issued. This was way back in 1983. The accident took place in 1997. It is not the case of the appellant that the respondent had allowed Gull Mohammad to drive the vehicle with knowledge that the license obtained by him from Hyderabad RTO was fake. There is no material on record to show that the respondent had any such knowledge. In absence of any such material or evidence, it cannot be said that he committed any breach of the condition. The onus was clearly on the appellant-Company to prove otherwise. There being no such proof, the order of the Commission upholding the claim of the respondent cannot be said to be illegal. In the premises, the impugned order of the Commission does not warrant any interference by this Court.
10. In the result the appeal is dismissed but without any order as to costs.