Madras High Court
Icici Lambard General Insurance ... vs M.Rakkathal on 22 February, 2010
Author: D.Hariparanthaman
Bench: D.Hariparanthaman
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 22/02/2010 CORAM THE HONOURABLE MR.JUSTICE D.HARIPARANTHAMAN C.M.A(MD)No.745 of 2009 and C.M.P.No. 17270 of 2003 ICICI Lambard General Insurance Company Limited,] represented through its Branch Manager, having his office at Second Floor, No.16, North Veli Street, Madurai. ... Appellants/Second respondent Vs 1.M.Rakkathal 2.M.Lakshmi 3.M.Rakku 4.M.Thavamani 5.M.Maruthu ... Respondents/Petitioners PRAYER Civil Miscellaneous Appeal filed under Section 173 of the Motor Vehicles Act, 1988, praying to set aside the fair and decretal order made in M.C.O.P.No.231 of 2006, dated 15.11.2008, on the file of the Motor Accident Claims Tribunal(District Judge), Sivagangai. !For Appellant ... Mr.S.Srinivasaraghavan ^For Respondents ... Mr.T.S.Mohammed Mohideen 1 to 5 For Respondent-6 ... Mr.V.Kannan * * * :JUDGMENT
The appellant is the Insurance Company. The sixth respondent is the owner of the Tractor. The driver, who drove the Tractor, did not have driving licence, when the accident took place on 02.07.2006, causing the death of a pedestrian one Thiru.Muthiah. The driver was issued a licence only on 21.09.2006. The victim was an agricultural worker. The respondents 1 to 5 are the legal heirs. They filed M.C.O.P.No.231 of 2006, claiming Rs.2 lakhs as compensation. The appellant contested the claim stating that the driver of the tractor did not possess valid driving licence when the accident took place and that therefore, the appellant was not liable to pay compensation.
2. The sixth respondent remained absent before the Tribunal and he was set ex-parte.
3. The Tribunal passed an order, dated 15.11.2008, in M.C.O.P.No.231 of 2006, holding that since the driver did not possess valid driving licence on the date of accident, the insurance company was not liable to pay the compensation. However, the Tribunal directed the appellant to pay the compensation and to recover the same from the owner of the vehicle. The appellant has preferred the present appeal against the said order.
4. Notice before admission was ordered on 12.08.2009 and thereafter, all the respondents appeared before this Court and this Court granted an order of interim stay on 11.09.2009, on condition that the appellant deposits 50% of the award amount with accrued interest and costs. The amount was deposited and the condition was complied with. The respondents 1 to 5 moved a withdrawal application. This Court directed that the withdrawal application would be decided later. Now, the notice is served on the respondents and therefore, the appeal itself is taken up for final disposal, with the consent of the parties.
5. Heard the learned counsels appearing on either side and perused the records.
6. The learned counsel for the appellant submits that the principle of pay and recover is not applicable in cases, where, the driver had no driving licence at the time of accident. The learned counsel submits that while the Tribunal followed the decision of the Honourable Apex court in Swaran Singh's case(National Insurance Company Limited .vs. Swaran Singh and others) reported in 2004(1) TNMAC 104 SC, the Tribunal failed to take note of Para 100 of the said judgment. Had the Tribunal taken note of para 100, the Tribunal could not have applied the principle of pay and recover in this case.
7. On the other hand, the learned counsel for the respondents 1 to 5 submits that while considering Section 149(2)(a)(ii) of the Motor Vehicles Act in Swaran Singh's case reported in 2004(1) TNMAC 104 SC, the Honourable Apex Court held that the principle of pay and recover could be applied in certain situations and those situations are, the driver was in possession of (1) fake driving licence. (2) No licence (3) expired licence (4) licence to drive one class or description of vehicle but driving different class or description (5) learner's licence, when the accident took place.
8. It is submitted that the argument now putforth by the appellant seeking to exclude the category of driver without licence from the principle of pay and recover is contrary to the dictum laid down by the Honourable Apex Court. The learned counsel further submits that the Honourable Apex Court in a later decision in National Insurance Company Limited .vs. Geetha Bhat and others reported in (2008) 12 SCC 426 has categorically held that in cases involving third party risk, the insurer has to pay the compensation at the first instance and thereafter, to recover the same from the insured. The learned counsel has also referred to another judgment of the Honourable Apex Court in Lehru's case reported in (2003) 3 SCC 337 and has contended that fake or forged licence is as good as no licence.
9. The crux of the submission of the respondents 1 to 5is that no difference could be made between fake licence and no licence. The learned counsel also relies on a decision of a Division Bench of this Court in United India Insurance Company Limited .vs. S.Saravanan, represented by his wife NF.S.Lalitha and another reported in 2009 (2) TNMAC 103(DB) in this regard.
10. The learned counsel for the sixth respondent submits that the appellant failed to discharge its burden to establish that the driver did not have valid licence. Hence, the finding of the Tribunal was erroneous and the entire liability is only on the insurance company.
11. At the outset, the argument advanced by the counsel for the sixth respondent has to be rejected in the absence of any appeal being preferred against the finding of the Tribunal, by the sixth respondent. Furthermore, the records from the RTA was produced and based on those records, the Tribunal correctly recorded a finding that the driver did not possess licence, when the accident took place.
12. Therefore, the core question that arises for consideration in this case is, whether the principle of pay and recover could be applied to cases, wherein, the driver had no licence, when the accident took place.
13. According to the learned counsel for the appellant, the principle of pay and recover would be applied to the four instances,namely (1) fake driving licence. (2) expired licence (3) licence to to drive one class or description of vehicle but driving different class or description (4) learner's licence, but, not in a case where the driver had no licence. The learned counsel for the appellant relies on para 100 and para 77 of the Swaran Singh's case in support of his submission. Para 100 of the Swaran Singh's case is extracted hereunder:
"100. Although, as noticed hereinbefore, there are certain special leave petitions wherein the persons having (Sic driving) the vehicles at the time when the accidents took place did not hold any licence at all, in the facts and circumstances of the case, we do not intend to set aside the said awards. Such awards may also be satisfied by the petitioners herein subject to their right to recover the same from the owners of the vehicles in the manner laid down therein. But this order may not be considered as a precedent."
The relevant portion from Paragraph 77 reads as follows:
"77. 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 the motor vehicle in terms of Section 5 of the Act has a responsibility to see that no vehicle is driven by a person who does not satisfy the provisions of Section 3 and 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."
14. I have perused the paragraphs 77 and 100 referred to by the appellant and I do not agree with the interpretation of the appellant on the judgement of the Honorable Apex Court in Swaran singh's case. It is crystal clear that the Honourable Supreme Court ruled that the principle of pay and recover would apply in all the five instances where the driver is not duly licenced and the case of "no licence" is not excluded, as contended by the appellant.
15. In fact, Para 4 of the judgment in Swaran Singh's case states the five instances that could be covered under section 149(2)(a)(ii) of the Motor Vehicles Act and "no licence" is one among the five. Para 4 of the judgment is extracted hereunder:
"4. Defences raised by the petitioner company in the claim petitions purported to be in terms of Section 1492(a)(ii) of the Motor Vehicles Act, 1988(hereinafter referred to as 'the Act') were: (a) driving licence produced by the driver or owner of the vehicle was a fake one;(b) driver did not have any licence whatsoever; (c) licence, although was granted to the concerned driver but on expiry thereof, the same had not been renewed; (d) licence granted to the drivers being for one class or description of vehicle but the vehicle involved in the accident was of different class or description; and (e) the vehicle in question was driven by a person having a learner's licence."
16. Therefore, the Swaran Singh's case took into account five instances that could be covered under Section 149(2)(a)(ii) of the Motor Vehicles Act. Each instance was discussed and paragraphs 77 to 80 relates to the instance of "no licence". In fact, prior to para 77,the heading is given as, "when admittedly no licence was obtained by a driver".
17. In these circumstances paragraphs 77 to 80 are extracted hereunder:-
"77. 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 the motor vehicle in terms of Section 5 of the Act has a responsibility to see that no vehicle is driven by a person who does not satisfy the provisions of Section 3 and 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.(See Jitendra Kumar, 2003 ACJ 1441 (SC))
78. In V. Mepherson .vs. Shiv Charan Singh, 1998 ACJ 601(Delhi), the owner of the vehicle was held not to be guilty of violating the condition of policy by wilfully 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."
79. In New India Assurance Company Limited .vs. Jagtar Singh, 1998 ACJ 1074 (HP), Honourable M.Srinvasan, C.J, as his Lordships then was, dealing with the case where a duly licensed 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 judgement in Kashiram Yadav .vs. Oriental Fire and General Insurance Company Limited, 1989,ACJ 1078(SC) and expressed its agreement with the views taken therein.
80. In National Insurance Company Limited .vs. Inshroo Devi, 1999 ACJ 615(HP), 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, 1989 ACJ 1978(SC):Skandia's case, 1987 ACJ 411(SC) and Sohan Lal Passi's case, 1996 ACJ 1044(SC). when the person has been granted licence for one type of vehicle but at the relevant time he was driving another type of vehicle."
18. The learned counsel for the appellant has picked up a few lines from paragraph 77, without going down to paras 78 to 80. Hence, the attempt made by the appellant to exclude the category of "no licence" from Section 149(2)(a)(ii)is of no substance. In fact, after discussing all the five instances, the Honourable Apex Court has drawn its conclusion from para 96 to
101. Before commencing para 96, the heading is given as, 'conclusion'. Therefore, para 100 has to be read along with paragraph 96 and Paragraph 96 is extracted hereunder:-
"96. It is, therefore, evident from the discussions made hereinbefore 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 has been holding the field for a long time."
19. The learned counsel for the respondents 1 to 5 has also brought to my notice para 68 of the judgment in this regard and para 68 is extracted hereunder:
"68. As has been held in Sohan Lal Passi, 1996 ACJ 1044(SC), the insurance company cannot shake off its liability to pay the compensation only by saying that at the relevant point of time the vehicle was driven by a person having no licence."
20. Further, as rightly contended by the learned counsel for the respondents 1 to 5, in para 102(X), the Honourable Apex Court has categorically held that in case, where the Insurance company satisfactorily proved its defence in accordance with Section 149(2) of the Motor Vehicles Act, the Tribunal could direct the insured to reimburse the compensation to the insurer by applying the principle of pay and recover. Para 102(x) is extracted hereunder:-
"(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 the claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the Tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by sub-
section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the Tribunal.
21. It is thus made clear that whenever an insurer proved his defense provided under Section 149(2)(a)(ii) of the Motor Vehicles Act, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation.
22. Furthermore, the learned counsel for the respondent 1 to 5 is correct in his submission that the Honourable Apex Court has held in paragraph 11 of the judgment in Geetha Bhat's case reported in (2008) 12 SCC 426, after considering Swaran Singh's case, that the principle of pay and recover could be applied to "no licence" category also. Para 11 of the Geetha Bhat's case is extracted hereunder:
"11. SWaran Singh had been followed later on in some cases by this Court. It was, however, distinguished in National Insurance Company Limited .vs. Laxmi Narain Dhut in the following terms(SCC PP.713 and 719, paras 19 and 37-38)
19. The primary stand of the insurance company is that the person driving the vehicle did not have a valid driving licence. In Swaran Singh case, the following situations were noted:
(i) the driver had a licence but it was fake
(ii)the driver had no licence at all;
(iii) the driver originally had a valid licence but it had expired as on the date of the accident and had not been renewed;
(iv) the licence was for a class of vehicles other than that which was the insured vehicle.
(v) the licence was a learner's licence.
Category(i)may cover two types of situations. First, the licence itself was fake and the second is where originally that licence is fake but there has been a renewal subsequently in accordance with law:
37. As noted above,the conceptual difference between third party right and own damage cases has to be kept in view. Initially, the burden is on the insurer to prove that the licence was a fake one. Once it is established the natural consequences have to flow.
38. In view of the above analysis the following situations emerge:
1. The decision in Swaran Singh case has no application to cases other than third party risks.
2. Where originally the licence 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
4. The concept of purposive interpretation has no application to cases relatable to Section 149 of the Act.
The High Courts/Commission shall now consider the matter afresh in the light of the position in law as delincated above"
23. Geetha Bhat's case also considered the Lehru's case and noted that, fake or forged licence is as good as "no licence". Paragraph 10 of the Geetha Bhat's case reads as follows:
"10. Lehru case was noticed in great detail by a three judge Bench of this Court in National Insurance Company Limited .vs. Swaran Singh holding:( 2003(3) SCC P.338, Para 92)
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.....".
24. In view of the judgment of the Honourable Apex Court in Geetha Bhat's case considering the Swaran sigh's case, I am of the considered view that both in the case of fake licence and also in the case of no licence, the principle of pay and recover could be applied.
25. Furthermore, the judgement of a Division Bench of this Court in United India Insurance Company Limited .vs.S.Saravanan, represented by his wife NF.S.Lalitha and another reported in 2009 2 TNMAC 103 relied on by the respondents 1 to 3 squarely applies to the facts of this case. In the said judgement, the Division Bench has considered all the judgments relating to pay and recover that arose in the context of Section 149(2)(a)(ii). In that case also, the accident took place on 26.10.2002, but, the driver took learner's licence only on 11.12.2002. The Division Bench considered Swaran Singh's case at para 10. Para 10 of the judgment reads as follows:
"10. Now we come to Swaran Singh's case(Supra). Paragraph 4 is relevant and is extracted hereunder:
"4. Defences raised by the petitioner-company in the claim petitions purported to be in terms of Section 149(2)(a)(ii) of the Motor Vehicles Act, 1988(hereinafter referred to as 'the Act') were: (a) driving licence produced by the driver or owner of the vehicle was a fake one;(b) driver did not have any licence whatsoever (c) licence, although was granted to the concerned driver but on expiry thereof, the same had not been renewed;(d) licence granted to the drivers being for one class or description of vehicle but the vehicle involved in the accident was of different class or description; and (e) the vehicle in question was driven by a person having a learner's licence".
It was contended thus:
"15. The decisions of this Court in New India Assurance Company Shimla .vs. Kamla, 2001 (4) SCC 342 and United India Insurance Company Limited .vs. Lehru, 2004 (1) TNMAC 349 SC; 2003(3) ACC 338, wherein it has been held that the court is entitled to issue a direction upon the Insurer to satisfy the award and thereafter recover the same from the owner of the vehicle do not lay down the correct law and should be overruled."
The Supreme Court held on hearing the rival submissions and the case law, thus:
"72. A beneficent statute, as is well known must receive a liberal interpretation(See Bangalore Water Supply and Sewerage Board etc. .vs. a.Rajappa and others etc., 1978(2) SCC 13: Steel Authority of India Limited and others .vs. National Union Waterfront Workers and others., 2001(7) SCC 1;ITI Limited .vs. Siemens Punjab Communications Network Limited., 2002(5)SCC 510; Amrit Bhikaji Kale and others .vs. Kashinath Janardhan Trade and Another., 1983(3)SCC 437: and Kunal Singh .vs. Union of India and another., 2003(4) SCC 524)
73. The liability of the Insurer is a statutory one. The liability of the Insurer to satisfy the decree passed in favour of a third party is also statutory."
As far as possession of a valid licence is concerned, the Supreme Court distinguished four different scenarios--
(a) where there was no licence
(b) where the licence is forged/fake,
(c) where the licence is for different class or vehicle from the offending vehicle, and
(d)where the licence is for a learner.
It then made the following primary conclusion:
"104. It is, therefore, evident from the discussions made hereinbefore 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 has been holding the field for a long time.
105. Apart from the reasons stated hereinbefore the doctrine of stare decisis persuades us not to deviate from the said principle."
26. The Division Bench has recorded its conclusion in para 22 and the relevant passage from paragraph 22 reads as follows:
"22. Considering the above decisions and the facts as seen from the records, the owner has breached the policy condition. At the same time, as far as the third party risk is concerned, the consistent view has been as can be seen from the above, that the Insurer can be seen from the above, that the Insurer must pay the third party and then take a decision whether to proceed against the owner. This is in consonance with the spirit of the Act."
27. Hence the Swaran Singh's case was considered by the Honourable Apex Court in a later decision as stated above and it has been categorically held that whenever compensation to third party arose, the insurance company should pay at the first instance and thereafter they should recover the same from the owner, even if the insurance company was not liable on being successfully put up their defense under Section 149(2)(a)(ii) of the Motor Vehicles Act. As held by the Division Bench of this Court reported in 2009(2) TNMAC 103, Swaran Singh case also covers the category of "no licence" cases also and the insurer has to pay first and then recover the amount from the insured.
28. Thus appeal fails and the same is dismissed. In this case, the deceased is a poor agricultural worker. The insurance company also deposited 50% of the award amount. The appellant is directed to deposit the balance award amount of compensation with accrued interest and costs and thereafter, recover the entire award amount from the owner by initiating execution proceedings directly against the owner, as held by the Honourable Apex Court in Nanjappan's case reported in I(2004)ACC 524(SC). Consequently, connected Civil Miscellaneous Petition is also dismissed. No costs.
vsn To The Motor Accident Claims Tribunal (District Judge), Sivagangai.