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2003 DIGILAW 325 (JK)

New India Assurance Co. Ltd. v. Satya Devi

2003-10-17

PERMOD KOHLI

body2003
The only controversy involved in the present appeal is regarding the liability of the appellant- insurance company towards respondents/claimants 1 to 5. The admitted facts on record are that accident took place on 15.8.1998 near Kootah Morh on Jammu- Pathankot High Way where two vehicles collided against each other. One Bansi Lal died in the said accident, who was driver of Bus No. DL-IP-5996 insured with the appellant-insurance company. A claim petition was preferred before the Motor Accident Claims Tribunal, Kathua by the dependents of Bansi Lal deceased passenger. The Tribunal returned the finding that the accident was caused due to negligence of both the vehicles. The other vehicle Bus No. JKU 342 was insured with respondent No. -9/ insurance company. The tribunal fastened the liability jointly upon both the insurance companies for an amount of Rs. 3,92,280/- being the award amount and interest @ 12% per annum on the same. Respondent-9 is said to have discharged his liability under the award. It is only the appellant, who has challenged the impugned award passed by the Motor Accident Claims Tribunal, Kathua. The main ground of challenge in the appeal to dispute its liability, is that the driver Mohd. Rashid of Bus No. DL-IP 5996 was not holding a valid driving licence at the time of accident which constitutes breach of the insurance policy and consequently the appellant/insurance company is absolved of its liability. 2. Mr. R.K. Gupta,learned counsel appearing for appellant/insurance company has submitted that Mohd. Rashid, driver of the offending vehicle was not having valid driving licence. The licence possessed by him is for a heavy motor vehicle and he was not entitled to drive a passenger service vehicle, for which a special endorsement is required to be made by the licensing authority authorizing the driver to drive passenger service vehicle. Reliance is placed on section-3 and section 2(1) of the Motor Vehicles Act,1988. According to the appellant, a specific plea was raised in the reply filed by the appellant/insurance company before the Motor Accident Claims Tribunal in para-6 of the preliminary objections, which reads as under:- "That the alleged driver of the alleged Bus No DL-IP 5996 was not holding effective driving licence at the time of alleged accident and was not authorized to drive such type vehicle as alleged. As such the answering respondent is not liable to indemnify the insured." 3. As such the answering respondent is not liable to indemnify the insured." 3. A specific issue being issue -2 was framed by the Motor Accident Claims Tribunal, which also reads as under : " Whether the drivers of the offending vehicles were not holding valid driving licences at the time of accident and the insurers of the respective vehicles are not liable to indemnify the insured? OPR 3&5" 4. With view to discharge its onus to prove the issue, the appellant /insurance company produced official from the office of licensing authority as witness, besides its own official namely Jai Kishan to prove the issue and discharge the burden. The witness from the licensing authority also produced a certificate from the Directorate of Transport and Tourism, Delhi Administration duly certified by the licensing authority regarding the nature of licence possessed by the driver. The certificate produced on 20.3.1999 contains following endorsement: " Licence No. C92080054 Mohd. Rasheed S/O Abdul Rehman H/W Valid upto 4.8.05." 5. It is stated that from the said record, it is established that driver Mohd. Rashid was authorized to drive heavy motor vehicle only and not a passenger service vehicle. Since the driver was not holding valid driving licence to drive a passenger service vehicle, this constitutes breach of insurance policy and consequently the appellant has no liability. Mr. R.K.Gupta, learned counsel for appellant has relied upon judgments; (i) in case National Insurance Company Ltd. v. Jugal Kishore & Ors., AIR 1988 SC 719; (ii) Judgment dated 12.11.1999 passed in CIMA No. 244/98 in case titled National Insurance Co. Ltd. v. Sita Ram & Ors; (iii) Judgment dated 22.3.1999 passed by Division Bench of this court in case Kewal Krishan and others v. Krishna Devi and Ors., 2001 ACJ 1029; and (iv) Judgment in case New India Assurance Co. v. Kamla and Ors., (2001) 4 Supreme Court Cases 342 to convas that if the driver of the offending vehicle was not possessed of licence to drive a passenger service vehicle, it amount to breach of insurance policy and insurance company has no liability. v. Kamla and Ors., (2001) 4 Supreme Court Cases 342 to convas that if the driver of the offending vehicle was not possessed of licence to drive a passenger service vehicle, it amount to breach of insurance policy and insurance company has no liability. It is true that co-ordinate bench of this court in CIMA No. 244/98 held that where the offending vehicle was driven by a driver without proper licence authorizing him to drive a passenger service vehicle, it cannot be said that the driver was having valid licence and if the driver had no valid driving licence, the insurance company is not liable to indemnify the insured. In rebuttal to the argument of the learned counsel for the appellant, Mr. Harshvardhan Gupta appearing for claimants has relied upon judgment in case United India Insurance Company Ltd. v. Kamal @ Kamla Devi & Ors., 1 (2000) ACC 52( DB) Punjab and Haryana and in National Insurance Co. Ltd. v. Main Bai & Ors., 1 ( 2000) ACC 335 (DB) Madhya Pradesh. 6. In the aforementioned judgments of High Courts of Punjab and Haryana amd Madhya Pradesh, it is held that under the provisions of Motor Vehicles Act, there is no distinction between the heavy motor vehicle and passenger motor vehicle. Hence, a person having licence to drive heavy motor vehicle, is competent to drive a Bus. 7. Be that as it may, the settled proposition of law is that the insurance company has statutory liability to indemnify third party under the provisions of Motor Vehicles Act. Therefore, there is no escape for the appellant but to discharge its liability as determined by the Motor Accident Claims Tribunal towards the claimants (respondents 1 to 5). The statutory liability has to be discharged irrespective of other factors. This question is no more res-integra having been settled by the Apex Court in New India Assurance Co. Ltd. v. Kamla & Ors., reported as AIR 2001 SC 1419, which reads as under : "The position can be summed up thus : The insurer and insured are bound by the conditions enumerated in the policy and the insurer is not liable to the insured if there is violation of any policy condition. Ltd. v. Kamla & Ors., reported as AIR 2001 SC 1419, which reads as under : "The position can be summed up thus : The insurer and insured are bound by the conditions enumerated in the policy and the insurer is not liable to the insured if there is violation of any policy condition. But the insurer who is made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy conditions on account of the vehicle being driven without a valid licence. Learned counsel for the insured contended that it is enough if he establishes that he made all due enquiries and believed bona fide that the driver employed by him had valid driving licence, in which case there was no breach of policy conditions. As we have not decided on that contention, it is open to the insured to raise it before the Claims Tribunal. In the present case, if the Insurance Company succeeds in establishing that there was breach of the policy conditions, the Claims Tribunal shall direct the insured to pay that amount to the insurer. In default, the insurer shall be allowed to recover that amount( which the insurer is directed to pay to the claimants- third parties ) from the insured person." 8. In another recent case AIR 2003 Supreme Court 1292 titled United India Insurance Co. Ltd. v. Lehru and Ors., Apex Court while considering the question of liability of Insurance Company under section 149 of the Motor Vehicles Act has held : "The insurance company cannot avoid its liability towards third party on ground that the licence of the driver of the vehicle was a fake licence. In order to avoid liability under Section 149(2)(a) (ii) it must be shown that there is a ` breach on part of the insured. To hold otherwise would lead to absurd results. Suppose a vehicle is stolen. Whilst it is being driven by the thief there is an accident. The thief is caught and it is ascertained that he had no licence. Can the insurance company disown liability? The answer has to be an emphatic `No. To hold otherwise would be to negate the very purpose of compulsory insurance. Suppose a vehicle is stolen. Whilst it is being driven by the thief there is an accident. The thief is caught and it is ascertained that he had no licence. Can the insurance company disown liability? The answer has to be an emphatic `No. To hold otherwise would be to negate the very purpose of compulsory insurance. The injured or relatives of person killed in the accident may find that the decree obtained by them is only a paper decree as the owner is a man of straw. The owner himself would be an innocent sufferer. It is for this reason that the Legislature, in its wisdom, has made insurance, at least third party insurance, compulsory. The aim and purpose being that an Insurance Company would be available to pay. The business of the company is to insurance. In all businesses there is an element of risk. All persons carrying on business must take risks associated with that business. Thus it is equitable that the business which is run for making profits also bears the risk associated with it. At the same time innocent parties must not be made to suffer or loss. These provisions meet these requirements." 9. Now the only question that needs consideration is, whether the appellant /insurance company can recover the amount from owner of the vehicle or not. 10. In view of the judgments of the Apex Court referred to above, the insurance company, if made liable to discharge its statutory liability towards third parties, is entitled to recover the same from the owner, provided there is breach of contract of insurance. Therefore, the appellant is entitled to recover the amount from insured which it has been made liable to to pay the claimants under the impugned award. The appellant however, is liable to discharge its entire liability under the award. 11. I do not find any illegality committed by the Tribunal in fastening the liability upon the appellant. This appeal is accordingly disposed of with the observations made hereinabove.