Gujarat High Court
Oriental Insurance Co. Ltd vs Gangaben Motibhai Desai on 7 June, 2022
Author: N.V.Anjaria
Bench: N.V.Anjaria
C/FA/5191/2019 JUDGMENT DATED: 07/06/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 5191 of 2019
With
CIVIL APPLICATION (FOR STAY) NO. 2 of 2018
In R/FIRST APPEAL NO. 5191 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MRS. JUSTICE MAUNA M. BHATT
===============================================================
1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
===============================================================
ORIENTAL INSURANCE CO. LTD
Versus
GANGABEN MOTIBHAI DESAI
===============================================================
Appearance:
MR RATHIN P RAVAL(5013) for the Appellant(s) No. 1
for the Defendant(s) No. 5
MS POOJA H HOTCHANDANI(7765) for the Defendant(s) No. 5
NOTICE SERVED for the Defendant(s) No. 3
SIDDHANT R SHAH(8722) for the Defendant(s) No. 1,2
UNSERVED EXPIRED (N) for the Defendant(s) No. 4
===============================================================
CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MRS. JUSTICE MAUNA M. BHATT
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C/FA/5191/2019 JUDGMENT DATED: 07/06/2022
Date : 07/06/2022
ORAL JUDGMENT
(PER : HONOURABLE MRS. JUSTICE MAUNA M. BHATT)
1. The Insurance Company as appellant has filed this appeal under Section 173 of the Motor Vehicles Act, 1988 ("the Act"
for short) challenging the judgement and order dated 8.8.2018, in MACP (Review Application) No. 2 of 2017 and judgement and award dated 30.8.2014 in MACP No.304 of 2007 passed by the Motor Accident Claims Tribunal (Main), Patan. In this First Appeal, respondent Nos. 1 to 4 are original claimants and Respondent No.5 (original opponent No.2) is owner of tanker bearing registration No. GJ 6 Y 5311.
2. The facts in brief are, that deceased Motibhai Kurshibhai Desai was serving as traffic constable in Patan District. On 4.6.2007, he was on night duty and was sitting with other staff constables in a Gypsy Car No. GJ 24 G 031 which was stationed on the side of the road for patrolling. At that time the tanker bearing registration No. GJ 6 Y 5311 dashed with the said Gypsy Car. On account of said accident, Motibhai Kurshibhai Desai died on the spot and other constable sustained injuries. The legal heirs of the deceased therefore filed Claim Petition under Section 166 of the Act, claiming compensation of Rs. 25 Lakhs. It was case of the claimants in the claim petition that the accident occurred on account of Page 2 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 sole negligence on the part of driver of the tanker and therefore claimants are entitled for compensation as claimed. Substantial evidence was led by the claimants in support of their claim. The Tribunal after hearing the parties and considering the evidence on record decided the issue as under:-
(i) For compensation, the Tribunal awarded total compensation of Rs.11,51,100/-, under different heads as enumerated in para 17 of the judgment and award dated 30.8.2014, with 9% interest from the date of application till its realisation.
(ii) For negligence, the Tribunal held the driver of the tanker as 90% negligent and driver of the Gypsy Car as 10% negligent. The Tribunal further held that this being a case of composite negligence on part of both the drivers (driver of tanker and driver of Gypsy car), respondents are jointly and severely liable for the compensation awarded.
2.1. It is case of the appellant-insurance company that after passing of the judgement and award dated 30.08.2014, as they had some doubt with regard to the genuineness of driving licence of the driver of the tanker, the insurance company referred the matter to the private investigator for verification of driving licence. Pursuant to which the appellant received a report from the private investigator intimating that, the driving Page 3 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 licence on record at Exhibit 31 was not issued by the RTO Allahabad. The report dated Nil of private investigator Shri Umeshkumar Yadav is on record of this appeal. On receipt of such report, (Annexure C to the appeal memo), the appellant preferred review application before the Tribunal on the ground that as driver of the tanker was having fake / invalid licence, on account of there being a breach of conditions of the insurance policy, insurance company is not liable to pay the compensation awarded. It was contended in the review application that the appellant-Insurance Company may be exonerated from the liability fastened on it. Admittedly, no challenge was made in relation to the quantum of compensation awarded by the Tribunal.
2.2. The Tribunal however, vide order dated 8.8.2018 rejected the review application No. 2 of 2017, observing that the Insurance Company had failed in establishing that it was a deliberate breach of conditions of Insurance policy on part of the owner of the tanker/insurer. The Tribunal further observed that despite private investigators report which was at belated stage, no notice was issued either to the driver of the tanker or to the owner of the tanker by the insurance company and, therefore, violation of conditions of insurance policy could not be established as contended in the review application. The Tribunal, thus rejected the review application holding the Page 4 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 appellant (insurance company) jointly and severally liable for the payment of compensation awarded vide order dated 30.08.2014.
3. Aggrieved by the order dated 8.8.2018 in MACP Review Application No. 2 of 2017 and judgement and award dated 30.8.2014 in MACP No.304 of 2007 passed by Motor Accident Claims Tribunal, Patan (Main), the present appeal is preferred.
4. We have heard Mr. Rathin Raval, learned advocate for the insurance company and Mr. Vishal Mehta, learned advocate with Ms. Pooja Hotchandani, learned advocate for the respondents.
5. Appearing for the appellant-insurance company, Mr. Rathin Raval, learned advocate contended that the Tribunal is in error in not considering the report of the private investigator. He further contended that considering the private investigator's report this court issued notice vide order dated 18.03.2021 to the RTO Allahabad, calling for the details in relation to driving licence of Shri Avinashkumar (driver of Tanker). Pursuant to this Court's directions, the RTO Allahabad has sent a report dated 31.5.2021 received by Registrar High Court of Gujarat on 9.6.2021. As per report dated 31.5.2021, no such driving licence has been issued by the authority in the name of Shri Avinashkumar. Relying upon the report of RTO Page 5 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 Allahabad dated 31.5.2021, he contended that this being a case of fake/invalid licence, there was breach of conditions of insurance policy and, therefore, the Tribunal is in error in fastening the liability on the appellant for payment of compensation to the claimants.
6. In support of his submission, he relied upon decision of Hon'ble Supreme Court in the case of National Insurance Co. Ltd. v. Swaran Singh reported in 2004 (3) SCC 297.
7. He also relied on the decision of the coordinate bench in the case of Mahmad Rafik Munnebhai Ansari vs. Gujarat State Road Transport Corporation in Civil Application No.801 of 2021 in First Appeal No.3173 of 2021 with First Appeal No.3849 of 2017 dated 22.10.2021 wherein in it is held as under:
"11. Tribunal while answering the issue regarding liability, has held that insurer of the motorcycle had failed to prove that driver of the motorcycle was not holding valid and effective driving licence at the time of the accident. It has also been further held that in the light of the driving licence produced at Exh. 43 and 67 which was for the period from 26.06.2009 to 25.06.2009 that driver of the motorcycle was not disqualified for obtaining such driving licence. The defence which is available to the insurer to stave off the liability to be fastened on it by virtue of the insurance policy taken on the motorcycle is traceable to section 149(2)(a)(ii) of Motor Vehicle Act, 1988, which mandates that driver of the offending vehicle is required to have effective and Page 6 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 valid driving licence as on the date of the accident. The Hon'ble Apex Court in the case of National Insurance Co. Ltd. versus Swaran Singh and Others reported in 2004(1) GLH 691, has held to the following effect : -
"WHEN ADMITTEDLY NO LICENCE WAS
OBTAINED BY A DRIVER:
82. We have analysed the relevant provisions of the said Act in terms whereof a motor vehicle must be driven by a person having a driving licence. The owner of a motor vehicle in terms of Section 5 of the Act has a responsibility to see that no vehicle is driven except by a person who does not satisfy the provisions of Section 3 or 4 of the Act. In a case, therefore, where the driver of the vehicle admittedly did not hold any licence and the same was allowed consciously to be driven by the owner of the vehicle by such person, the insurer is entitled to succeed in its defence and avoid liability. The matter, however, may be different where a disputed question of fact arises as to whether the driver had a valid licence or where the owner of the vehicle committed a breach of the terms of the contract of insurance as also the provisions of the Act by consciously allowing any person to drive a vehicle who did not have a valid driving licence. In a given case, the driver of the vehicle may not have any hand at all, e.g. a case where an accident takes place owing to a mechanical fault or vis-major.
83. In V. Mepherson v. Shiv Charan Singh [1998 ACJ 601 (Del.)] the owner of the vehicle was held not to be guilty of violating Page 7 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 the condition of policy by willfully permitting his son to drive the car who had no driving licence at the time of accident. In that case, it was held that the owner and insurer both were jointly and severally liable.
84. In New India Assurance Co. Ltd. vs. Jagtar Singh and Others, [1998 ACJ 1074], Hon'ble M. Srinivasan, CJ, as His Lordship then was, dealing with the case where a duly licenced driver was driving a vehicle but there was a dispute as to who was driving the vehicle. In that case the court referred to the judgment in Kashiram Yadav vs. Oriental Fire & General Insurance Co. Ltd. [1989 ACJ 1078 (SC)] and expressed its agreement with the views taken therein.
85. In National Insurance Co. Ltd. vs. Ishroo Devi and Others, [1999 ACJ 615] where there was no evidence that the society which employed the driver was having knowledge that the driver was not holding a valid licence, it was held the insurance company is liable. The court relied upon the decisions of this Court in Kashiram Yadav's case (supra), Skandia's case (supra) and Sohan Lal Passi's case (supra)."
12. Thus, insurer would be entitled to raise a defense that driver of the offending vehicle was not possessing a valid driving licence at the time of the accident and as such it is not entitled to indemnify the claim. If it is to be construed that burden was on the insurance company to prove that owner of the vehicle had consciously allowed the driver of the vehicle whom he knew, did not possess driving licence, then in such circumstances also insurer would not be required to indemnify the Page 8 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 award. In the instant case, said situation would not arise, inasmuch as, the owner of the vehicle who was arraigned as respondent No. 2, did not appear before the Tribunal and did not contest the matter. As such, burden had shifted on the insurance company. Only on initial burden cast on the insured namely the owner of the vehicle was discharged, it would have shifted to the claimant to dispense the same. The said exercise having not been done and undisputedly Exh. 43 and 67, the driving licence which was produced by the claimant disclosing that driver of the motorcycle was possessing the driving licence which was effective from 26.06.2009 onwards, and he did not possess the driving licence as on the date of accident i.e. 22.02.2009, it cannot be gainsaid by the claimant that insurer was required to indemnify the claim. It is not the case of the claimant that either the driver of the motorcycle was possessing a learner licence or the said driving licence which had been issued, had expired. In that view of the matter, the contention raised by the learned counsel appearing for the claimant, cannot be accepted and it stands rejected. In the facts obtained in the present case clearly disclosing that driver of the offending vehicle namely driver of the motorcycle was not possessing the driving licence as on the date of accident, insurer of the motorcycle cannot be made to indemnify the claim. However, we make it clear that the claimant would be at liberty to proceed against owner of the said vehicle for recovering the compensation. Hence, point no. 1 is answered in favour of the insurer and held that insurer of motorcycle had proved that driver of the motorcycle did not possess valid driving licence as on date of accident."
7.1. Without prejudice to the above contention, alternatively he submitted to apply the principle of "to pay Page 9 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 and recover". He thus, submitted to allow the appeal of the Appellant.
8. Per contra, Mr. Vishal Mehta learned advocate with Ms. Pooja H. Hotchandani learned advocate, appearing for the owner of the tanker (opponent No.2) submitted that in facts of the present case the principle of "to pay and recover"
would not be applicable. Reasonable care was taken by the owner of the tanker with regard to the genuineness of driving licence of the driver Avinashkumar at the time of his appointment. Referring to the affidavit, 10.06.2021, he submitted that at no point of time particularly during the transportation business of respondent No.1, the genuineness of driving licence was doubted by any authority. Relying upon Annexure-A-(page 36) letter dated 10.6.2021, he submitted that the other drivers who recommended name of Avinashkumar, had certified the documents produced by Avinashkumar (Driver of Tanker). Thus, owner of the tanker (respondent NO.1) had taken reasonable care and was not negligent with regard to the authenticity of driving licence. He therefore submitted that this is not a case of "to pay and recover" and appeal of the Insurance company deserves to be dismissed. In support of his submission he relied upon the following decisions:
(1) Lal Chand vs. Oriental Insurance Co. Ltd. reported in (2006) 7 SCC 318.Page 10 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022
C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 "8. We have perused the pleadings and the orders passed by the Tribunal and also of the High Court and the annexures filed along with the appeal. This Court in the case of United India Insurance Co. Ltd. versus Lehru & ors., reported in 2003 (3) SCC 338, in paragraph 20 has observed that 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). He will, therefore, have to check whether the driver has a driving licence and 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 test of the driver, and if he finds that the driver is competent to drive the vehicle, he will hire the driver.
9. In the instant case, the owner has not only seen and examined the driving licence produced by the driver but also took the test of the driving of the driver and found that the driver was competent to drive the vehicle and thereafter appointed him as driver of the vehicle in question. Thus, 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) and the Insurance Company would not then be absloved of its liability.
10. Another decision rendered by a three Judges Bench of this Court in the case of National Insurance Co. Ltd. versus Swaran Singh & Ors, reported in 2004 (3) SCC 297, can also be usefully referred to in the present context. This Court in para 110 of this judgment gave the summary of their findings to the various issues as raised in those petitions. We are concerned only with sub para (iii) of paragraph 110. The said sub para (iii) reads thus:
Page 11 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 "110. (iii) The breach of policy condition e.g. Disqualification of the driver or invalid driving licence of the driver, as contained in sub-
section (1)(a)(ii) of Section 149, has 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 licenced driver or one who was not disqualified to drive at the relevant time."
11. As observed in the above paragraph, the insurer, namely the Insurance Company, has to prove that the insured, namely the owner of the vehicle, 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 licenced driver or one who was not disqualified to drive at the relevant point of time.
12. We respectfully agree and following the above ruling, we allow the appeal filed by the owner of the vehicle and absolve him from any liability as ordered by the High Court. It is now brought to our notice that the entire compensation has already been deposited and the same has been withdrawn by the claimants. No other point has been urged by both sides. We, therefore, allow the appeal and order no costs."
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(ii) Nirmala Kothari vs. United India Insurance Company Limited reported in (2020) 4 SCC 49 .
"10. While the insurer can certainly take the defence that the licence of the driver of the car at the time of accident was invalid/fake however the onus of proving that the insured did not take adequate care and caution to verify the genuineness of the licence or was guilty of willful breach of the conditions of the insurance policy or the contract of insurance lies on the insurer.
11. The view taken by the National Commission that the law as settled in the Pepsu case (Supra) is not applicable in the present matter as it related to third- party claim is erroneous. It has been categorically held in the case of National Insurance Co. Ltd. vs. Swaran Singh & Ors.3 (SCC pp.341, para 110) that, "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 a duly licenced driver or one who was not disqualified to drive at the relevant time."
12. While hiring a driver the employer is expected to verify if the driver has a driving licence. If the driver produces a licence which on the face of it looks Page 13 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 genuine, the employer is not expected to further investigate into the authenticity of the licence unless there is cause to believe otherwise. If the employer finds the driver to be competent to drive the vehicle and has satisfied himself that the driver has a driving licence there would be no breach of Section 149(2)(a)
(ii) and the Insurance Company would be liable under the policy. It would be unreasonable to place such a high onus on the insured to make enquiries with RTOs all over the country to ascertain the veracity of the driving licence. However, if the Insurance Company is able to prove that the owner/insured was aware or had notice that the licence was fake or invalid and still permitted the person to drive, the insurance company would no longer continue to be liable."
9. We have carefully considered the submissions of both the parties, the evidence on record and the decisions relied upon. Upon re-appreciation of evidence, particularly the report of RTO Allahabad dated 31.5.2021 received by this Court on 9.6.2021, it is clear that such driving licence was not issued by the authority in the name of Avinashkumar , who was driving the offending vehicle at the relevant time. However, it cannot be ignored that verification in relation to genuineness of driving licence was not done by the insurance company at any stage prior to the award dated 30.8.2014. Driver did not appear in the claim petition and therefore, no cross examination was done by either party till passing of the impugned award. The entire exercise for verification of driving licence was done by the insurance company only after the Page 14 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 liability was fastened on it. Admittedly, the private investigators report as well as report of RTO Allahabad were post award of the Tribunal. Further from the affidavit of respondent No.1(owner of the tanker), it is clear that the driver of the tanker was missing since the date of accident and had not joined duty thereafter. It would be relevant to reproduced this court's order dated 18.3.2021.
"2. Despite this prima facie evidence produced by the Appellant - Insurance Company before the learned Tribunal that on account of this, the License of the Driver Mr. Avinash Kumar Sharma, involved in the said Accident appeared to be fake and, therefore, no claim against the Appellant - Insurance Company could be awarded by the learned Tribunal, the learned Tribunal by its impugned Order dated 8.8.2018 has dismissed the said Review Petition on the ground that during the trial, the Appellant-Insurance Company failed to adduce the said evidence and was only trying to strengthen its case by filing such evidence in the Review Petition.
3. Mr. Rathin Raval, learned Counsel for the Appellant- Insurance Company also submitted that the said driver was deleted from the array of the Respondents by the learned Tribunal, which was also wrong, as he was the main Tort Feasor.
4. Prima facie, we are not satisfied with the impugned order passed by the learned Tribunal on 8.8.2018 rejecting the Review Petition and the learned Tribunal ought to have undertaken the inquiry at its own level about the genuineness or fakeness of the license of the offending vehicle produced before it. It is very essential for the fact finding bodies like the Motor Page 15 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 Accident Claims Tribunal to allow parties to establish the genuineness of the claims, the parties and the documents before it before the compensation is awarded under Sections 164 and 166 of the Motor Vehicles Act, as public money with Insurance Companies is to be paid in the form of compensation.
5. Mr. Rathin Raval, learned Counsel for the Appellant
- Insurance Company also suggested that the license of the said driver Mr. Avinash Kumar Sharma was not in fact ever produced before the Tribunal and Mr. Dwivedi, learned Counsel appearing for the owner of the said vehicle may be directed to produce the Licence of the driver Mr. Avinash Kumar Sharma even at this stage to at least prima facie compare the genuineness of the said document in light of the investigation report. Upon this suggestion, Mr. Dwivedi has submitted that driver Mr. Avinash Kumar Sharma is no longer in the service of the owner of the vehicle Mr. Dinesh Kumar Dhanraj Garg, Baroda - Respondent No.2 before the Tribunal and is said to be absconding ever since the said date of accident dated 30.8.2014.
6. In view of this, let Bailable Warrants be issued to secure the presence of the said driver Mr.Avinash Kumar Sharma before this Court for sum of Rs.10,000/- (Rupees ten thousand only) to appear before this Court on the next date of hearing and produce his original Driving License held at the time of said accident dated 30.8.2014 and as held by him now, if any, with his full contact details and present address of residence, mobile phone number / land-line number etc.
7. The owner of the vehicle Mr.Dinesh Kumar Dhanraj Garg is also directed to file, his own Affidavit in this Court, about his knowledge of the said Driver holding the license or not and if he has a copy of the Driving License possessed by the said driver Mr.Avinash Kumar Page 16 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 Sharma, the same may be produced before this Court and also state the fact whether the said driver's residential address and present whereabouts are known to him or not.
8. A copy of this Order may also be sent to the RTO, Allahabad alongwith the copy of the Driving License produced before this Court in the name of Mr.Avinash Kumar Sharma by Licensing Authority of the Motor Vehicle Department, Allahabad and the RTO, Allahabad may send an independent Report whether any such license was issued in the year 2002, or even earlier or later in the name of Mr.Avinash Kumar Sharma, son of Mr.Kuber Sharma, resident of 16, Sulem Sarai, Allahabad or not.
9. Let these Report and Affidavit be submitted within eight weeks from today."
10. In the above fact situation consideration of following decision in our opinion would be relevant.
11. In the case of National Insurance Company Limited vs. Laxmi Narain Dhut reported in (2007) 3 SCC 700 the Hon'ble Court in paragraphs 9, 10,. 11, 24 and 38 has held as under:
"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 insurancey 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 Page 17 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 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".
11. In para 110 also the summary of the findings were recorded which reads as follows:
(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third-party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.
(ii) An insurer is entitled to raise a defence in a claim petition filed under Section 163-A or Section 166 of the Motor Vehicles Act, 1988, inter alia, in terms of Section 149(2)(a)
(ii) of the said Act.Page 18 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022
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(iii) The breach of policy condition e.g. disqualification of the driver or invalid driving licence of the driver, as contained in sub- section (2)(a)(ii) of Section 149, has 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 owner of the vehicle; the burden of proof wherefore would be on them.
(v) The court cannot lay down any criteria as to how the said burden would be discharged, inasmuch as the same would depend upon the facts and circumstances 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 Page 19 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 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.
24. In the background of the statutory provisions, one thing is crystal clear i.e. the statute is beneficial one qua the third party. But that benefit cannot be extended to the owner of the offending vehicle. The logic of fake licence has to be considered differently in respect of third party and in respect of own damage claims.
38. In view of the above analysis the following situations emerge:
1. The decision in Swaran Singh's case (supra) has no application to cases other than third party risks.
2. Where originally the license was a fake one, renewal cannot cure the inherent fatality. 3 In case of third party risks the insurer has to indemnify the amount and if so advised to recover the same from the insured.Page 20 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022
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4. The concept of purposive interpretation has no application to cases relatable to Section 149 of the Act.
The High Courts/Commissions shall now consider the matter afresh in the light of the position in law as delineated above."
12. In view of the above facts and the legal position in our opinion, the appellant Insurance Company, after passing of the impugned award, had caused inquiry in relation to fake or invalid licence of the driver. Further, as held by the Hon'ble SC in the case of National Insurance Company v/s Laxmi Narayan Duht (supra), compulsory insurance of vehicle against third-party risk is a social welfare legislation to extend relief by compensation to victims of accident, therefore in our opinion insurer- insurance company cannot be exonerated from its liability. Therefore, we are not in agreement with the submission of learned advocate Mr. Rathin Raval for the insurance company that appeal of the appellant is to be allowed and the insurance company is to be exonerated from its liability. However, considering that the insurance company has discharged its onus at the later stage which prompted them to file a review application, it would now be relevant to consider the submissions of Mr. Mehta learned advocate for the owner of the tanker that is it a case where owner of the Page 21 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 tanker had taken reasonable care and therefore there was no breach of conditions of policy.
13. In decision of the Hon'ble Supreme Court in the case of Singh Ram vs. Nirmala reported in (2018) 3 SCC 800, the Hon'ble Supreme Court held as under:
"6. Before we advert to the decision in Swaran Singh (supra) a brief reference to the facts as they emerge from the decision of the Tribunal is necessary. Initially before the Tribunal the appellant produced a driving licence issued by the Motor Vehicles Department, Agra (Exh.R-1). The driving licence was found to be fake.
The statement of the Senior Assistant in the office of the RTO, Agra was that Exh.R-1 had not been issued by the office. The Tribunal noted that the witness had proved the report (Exh.R-2) issued by the department and concluded that the licence was fake. Faced with this situation, the appellant attempted to prove that he held a valid driving licence issued by the licencing authority at Jagadhri to drive a motor cycle. The Tribunal rejected the application filed by the appellant for producing additional evidence. The Tribunal noted that even otherwise, the licence which was issued by the licencing authority, Jagadhri for a tractor and car was valid only until 29 August 2009. The accident took place on 22 March 2010. The licence was renewed on 28 November 2011 more than two years after it had expired. On these facts, the Tribunal observed that on the date of the accident, the appellant was not holding a valid and effective driving licence nor was there any evidence to indicate that the licence was sought to be renewed as required in law, within 30 days of its expiry. The Tribunal also observed that the appellant Page 22 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 did not hold a valid licence to drive a motor cycle. On these grounds, the insurer was absolved. The High Court has confirmed the direction of the Tribunal to pay and recover.
7. In Swaran Singh (supra), this Court held that the holder of a driving licence has a period of thirty days on its expiry, to renew it:
"45. Thus, a person whose licence is ordinarily renewed in terms of the Motor Vehicles Act and the Rules framed thereunder, despite the fact that during the interregnum period, namely, when the accident took place and the date of expiry of the licence, he did not have a valid licence, he could during the prescribed period apply for renewal thereof and could obtain the same automatically without undergoing any further test or without having been declared unqualified therefor. Proviso appended to Section 14 in unequivocal terms states that the licence remains valid for a period of thirty days from the day of its expiry.
46. Section 15 of the Act does not empower the authorities to reject an application for renewal only on the ground that there is a break in validity or tenure of the driving licence has lapsed, as in the meantime the provisions for disqualification of the driver contained in Sections 19, 20, 21, 22, 23 and 24 will not be attracted, would indisputably confer a right upon the person to get his driving licence renewed. In that view of the matter, he cannot be said to be delicenced and the same shall remain valid for a period of thirty days after its expiry."Page 23 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022
C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 The following conclusion has been recorded in summation in the judgment::
"(iii) The breach of policy condition e.g. disqualification of the driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(ii) of Section 149, has 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 licenced driver or one who was not disqualified to drive at the relevant time.
(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.
Page 24 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022C/FA/5191/2019 JUDGMENT DATED: 07/06/2022
(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".
8. In the present case it is necessary to note, as observed by the Tribunal, that the owner did not depose in evidence and stayed away from the witness box. He produced a licence which was found to be fake. Another licence which he sought to produce had already expired before the accident and was not renewed within the prescribed period. It was renewed well after two years had expired. The appellant as owner had evidently failed to take reasonable care (proposition (vii) of Swaran Singh) since he could not have been unmindful of facts which were within his knowledge."
14. Moreover, in the case of Lal Chand vs. Oriental Insurance Co. Ltd. (supra), the decision relied upon by learned advocate Mr. Vishal Mehta for the owner of the tanker (respondent No.1), it has been held as under:
"10. Another decision rendered by a three Judges Bench of this Court in the case of National Insurance Co. Ltd. versus Swaran Singh & Ors, reported in 2004 (3) SCC 297, can also be usefully referred to in the present context. This Court in para 110 of this judgment gave the summary of their findings to the various issues as raised in those petitions. We are concerned only with sub para (iii) of paragraph 110.
The said sub para (iii) reads thus:
Page 25 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 "110.(iii) The breach of policy condition e.g. Disqualification of the driver or invalid driving licence of the driver, as contained in sub-
section (1)(a)(ii) of Section 149, has 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."
15. For the case in hand there is nothing on record which suggest that the owner of the tanker was vigilant enough to verify the testimonials of the Driver. The affidavit filed at this stage pursuant to this court's direction would not amount to reasonable care taken at the initial stage. The document filed along with affidavit that other divers who had recommended name of Avinashkumar had verified the driving licence is difficult to believe as the same is undated, on a plain paper not even on a letterhead of transport company. Therefore in our considered opinion this is not a case where reasonable care was stated to be taken by the owner of the vehicle at the Page 26 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022 C/FA/5191/2019 JUDGMENT DATED: 07/06/2022 relevant time particularly after appointing him as driver for its business. Further, it is nowhere on record that the owner of the tanker has verified the genuineness of the driving licence at regular intervals.
16. As observed by the Hon'ble Supreme Court in the case of Singh Ram vs. Nirmala reported in (2018) 3 SCC 800 the fulfillment of the requirement of law as supported in the case of National Insurance Co. Ltd. vs. Swaran Singh shall have to be determined in facts of each case. In facts of present case, it is difficult to believe as contended by Mr. Mehta, learned advocate, that the driver of the tanker was vigilant enough to verify the details with regard to the genuineness of the driving licence and reasonable care was taken by him at the regular interval. Mere filing of affidavit annexing the plain paper dated 'Nil' not even on the letter head would create doubt in relation to the efforts made by the owner of the tanker. Considering the present fact situation in our opinion it would be difficult to believe that the driver of the tanker had taken reasonable care to inquire about the genuineness or otherwise of the driving licence. Therefore, it is very difficult to accept the submission of learned advocate for respondent No.1 that no recovery would be permitted from the owner of the tanker. In our considered opinion it is a case where principle of "
pay and recover " would be applicable.Page 27 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022
C/FA/5191/2019 JUDGMENT DATED: 07/06/2022
17. Therefore, the appeal filed by the appellant is partly allowed. The Appellant is directed to first pay the compensation awarded by the Tribunal vide order dated 30.8.2014, within a period of eight (8) weeks from the copy of the receipt of the order to the original claimants through RTGS, if not already paid. The appellant - Insurance Company shall thereafter be entitled to recover the amount from other respondents in accordance with law. It made clear that as there was no challenge in relation to the compensation awarded by the Tribunal, we have not gone into the compensation aspect.
18. In view of the disposal of the main appeal, Civil Application (for stay) also stands disposed of.
(N.V.ANJARIA, J) (MAUNA M. BHATT,J) NAIR SMITA V. Page 28 of 28 Downloaded on : Sat Dec 24 18:19:21 IST 2022