1 Whether Reporters of Local Papers may be allowed to see YES the judgment?
2 To be referred to the Reporter or not? YES 3 Whether their Lordships wish to see the fair copy of the NO judgment?
4 Whether this case involves a substantial question of law as NO to the interpretation of the constitution of India, 1950 or any order made thereunder?
==================================== NEW INDIA ASSURANCE CO LTD....Appellant(s) Versus ALKABEN ATULKUMAR RAO & 3....Defendant(s) ==================================== Appearance:
MR GC MAZMUDAR, ADVOCATE for the Appellant(s) No. 1 MR HG MAZMUDAR, ADVOCATE for the Appellant(s) No. 1 ANISH P CHARI, ADVOCATE for the Defendant(s) No. 3 4 MR.HIREN M MODI, ADVOCATE for the Defendant(s) No. 3 4 ==================================== CORAM: HONOURABLE MR.JUSTICE JAYANT PATEL and HONOURABLE MR.JUSTICE G.B.SHAH Page 1 of 13 C/FA/20/2015 JUDGMENT Date : 07/04/2015 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE JAYANT PATEL)
1. The present appeal is directed against the judgment and award passed by the Tribunal in Motor Accident Claim Petition No. 134 of 2012 so far as it relates not permitting the insurance company to recover the amount from the owner and the driver of the vehicle, the original respondent Nos. 1 and 2 -
respondent Nos. 3 and 4 herein.
2. The short facts of the case appear to be that on 18/05/2012 deceased Atulkumar Hiralal Rao was going to Vansda to Ahwa via Waghai on his motorcycle bearing registration No. GJ6AK 5499 and when he reached near village: Pimpri, another motorcycle bearing registration No. GJ15NN9116 dashed with the motorcycle of the deceased. The deceased sustained serious injuries and ultimately succumbed to the injuries. The claim petition was filed for compensation of Rs.53,08,000/ being Motor Accident Claim Petition No. 134 of 2012. The Tribunal, at the conclusion of the proceedings, in the judgment and award, found that the Driving Licence of the driver was fake but Page 2 of 13 C/FA/20/2015 JUDGMENT as the vehicle was insured, passed the award against original opponent Nos. 1, 2 and 3 for Rs.10,65,720/ with interest @ 7.5% per annum but the Tribunal did not pass any order permitting recovery by the insurance company from the owner and the driver of the vehicle. Under the circumstances, the insurance company has preferred the present appeal limited to that extent.
3. We have heard Mr. Majmudar, learned counsel appearing for the appellant insurance company and Mr. Modi, learned counsel appearing for the respondent Nos. 3 and 4. So far as respondent Nos. 1 and 2 are concerned, they are original claimants and they would not be affected if the insurance company is permitted to recover the amount from the respondent Nos. 3 and 4 since it is essentially a matter between the insurance company being insurer and the respondent No. 4 being insured.
4. We may record that the Tribunal, on facts, has found that the Driving Licence of the driver was fake and there was breach of the condition of the policy under Section 149(2)(a)(ii) of the Motor Vehicles Act (hereinafter referred to as 'the Act'). But, Page 3 of 13 C/FA/20/2015 JUDGMENT after having found by the Tribunal that the licence was fake and the insurance company is liable to pay the amount to the third party, the Tribunal failed to consider the aspect that liberty should be made available to the insurance company to recover the amount from the insured even if such was the position. At this stage, we may profitably refer to two decisions of the Apex Court, one is in case of National Insurance Company Ltd. Vs. Swaran Singh and Others, reported in (2004) 3 SCC 297 and more particularly, the concluding observations made by the Apex Court at para 110 of the said decision, which read as under:
"110. The summary of our findings to the various issues as raised in these petitions is as follows:
(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against 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.
claim petition filed under Section 163 A or Section 166 of the Motor Vehicles Act, 1988 inter alia in terms of Section 149(2)(a)(ii) of the said Act.
(iii) The breach of policy condition e.g., disqualification of driver or invalid driving licence of the driver, as contained in subsection (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 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.
(iv) The 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 wherefor would be on them.
C/FA/20/2015 JUDGMENT (v) The court cannot lay down any criteria as to
how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance of each case.
(vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards 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 insured 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 fulfil the requirements of law or not will have to be determined in each case.
(viii) If a vehicle at the time of accident was driven by a person having a learner's licence, the insurance Page 6 of 13 C/FA/20/2015 JUDGMENT companies would be liable to satisfy the decree.
(ix) The claims tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third party arising in use of motor vehicle. The said power of the tribunal is not restricted to decide the claims inter se between claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defence or defences to the insurer, the Tribunal has necessarily the power and jurisdiction to decide disputes inter se between insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and the award made thereon is enforceable and executable in the same manner as provided in Section 174 of the Act for enforcement and execution of the award in favour of the claimants.
(x) Where on adjudication of the claim under the Act the tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of section 149(2) read Page 7 of 13 C/FA/20/2015 JUDGMENT with subsection (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the tribunal. Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the tribunal to the Collector in the same manner under Section 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 subsection (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the tribunal.
(xi) The provisions contained in subsection (4) with proviso thereunder and subsection (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover amount paid under the contract of insurance on behalf of the insured can be taken recourse to by the Tribunal and be extended to claims and defences of insurer against insured by relegating them to the remedy before regular court in cases where on given facts and circumstances adjudication of their claims inter se might delay the adjudication of the claims of the Page 8 of 13 C/FA/20/2015 JUDGMENT victims."
4.1 The aforesaid shows that, as held by the Apex Court in the aforesaid decision, the Tribunal can enable the insurer to recover the amount from the insured unless the insured has proved otherwise for taking all reasonable care and cautions on his part. Mr. Modi, the learned counsel for the respondent Nos.
3 and 4, contended that in view of the observations made at para (iii) of para 110 of the aforesaid decision, the defence would be available to the insured to repudiate the liability. He submitted that there is no blanket proposition that if the licence is found to be fake, the insurance company shall be at the liberty to recover the amount from the owner of the vehicle i.e.
4.2 As such, the interpretation, as put forward, cannot be accepted because the observations made in para (iii) of para 110 of the aforesaid decision are for enabling the insurance company to repudiate the liability if such is satisfactorily proved. At this stage, we may refer to the decision of the Apex Court in the case of Pepsu Road Transport Corporation Vs. National Insurance Company, reported in (2013) 10 SCC 217, wherein, the Apex Page 9 of 13 C/FA/20/2015 JUDGMENT Court, in paras 9 and 10 observed thus:
"9. Swaran Singh case was subsequently considered by a twoJudge Bench of this Court in National Insurance Company Limited vs. Laxmi Narain Dhut. It was explained that: (Swaran Singh case, SCC p. 341 para 110) "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 Page 10 of 13 C/FA/20/2015 JUDGMENT 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 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 Singhs 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."
C/FA/20/2015 JUDGMENT 4.3 If the facts and circumstances of the present case are further examined in light of the aforesaid legal position, it is not the case of the respondent Nos. 3 and 4 that they have entered into the witness box for showing the Tribunal that all care and cautions were taken for verifying the genuineness of the licence or otherwise. Under these circumstances, the contention raised for availability of the defence even if accepted is on a non existent premise because no evidence has been led on behalf of the owner of the vehicle for such purpose whatsoever before the Tribunal. Hence, it was required for the Tribunal to enable the insurance company to recover the amount from the owner and the driver of the vehicle in accordance with law after the payment is made to the original claimants as per the award.
Since, such has not been expressly provided, the award passed by the Tribunal deserves to be modified to that extent.
5. In view of the aforesaid observations and discussion, the judgment and award passed by the Tribunal is modified to the extent that after payment of the amount as per the award by the appellant insurance company to the original claimants i.e. respondent Nos. 1 and 2, it would be open to the appellant Page 12 of 13 C/FA/20/2015 JUDGMENT insurance company to recover the amount from the respondent Nos. 3 and 4 in accordance with law.
5.1 The appeal is partly allowed to the aforesaid extent.
Considering the facts and circumstances of the case, no order as to costs.
[ Jayant Patel, J. ] [ G. B. Shah, J. ] hiren Page 13 of 13