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2008 DIGILAW 547 (KER)

Purushothaman K. M. v. Ramesh Prabhu

2008-09-01

JACOB BENJAMIN KOSHY, THOMAS P.JOSEPH

body2008
JUDGMENT J. B. Koshy, J. 1. The second respondent in OP (MV) No. 1071/1997, the owner of the autorickshaw has filed this appeal against the direction of the Tribunal allowing the insurance company to realise the amount of compensation deposited, on the ground that there is violation of policy conditions. The reason stated in the Award at paragraph 10 reads as follows: "10. At the time of trial, the 3rd respondent admitted the existence of a valid policy with respect to the vehicle involved in the accident. But it is contended that the company is not liable to indemnify the 2nd respondent because the first respondent had no valid driving licence at the time of accident. Ext. B3 is the office copy of the policy, which shows that licence of the driver is a condition for the liability of the company. Ext. B1 is a petty case charged against the first respondent for driving the vehicle without having a valid driving licence. ......"� Ext. A11 is the driving licence issued to the first respondent, the driver of the vehicle, to drive a three wheeler. That was issued in 1994, valid up to 2014. The Tribunal did not consider Ext. A11. We also note that no evidence was adduced by the insurance company to show that the owner (insured) was negligent in entrusting the autorickshaw to the driver, that there was fundamental breach of the policy conditions and that the absence of licence is the cause of the accident. It is submitted that there was no badge and, therefore, there was no proper licence. But, merely because a copy of the charge sheet was produced for driving without a valid driving licence, it cannot be stated that the driver was not having a valid driving licence. The contention that there was no badge at the time of accident was not mentioned in the written statement filed by the insurance company before the Tribunal. But, merely because a copy of the charge sheet was produced for driving without a valid driving licence, it cannot be stated that the driver was not having a valid driving licence. The contention that there was no badge at the time of accident was not mentioned in the written statement filed by the insurance company before the Tribunal. Further, a three member bench of the Supreme Court in National Insurance Company Ltd. v. Swaran Singh and Others, 2004 KHC 314 : AIR 2004 SC 1531 : 2004 (1) KLT 781 : 2004 (3) SCC 297 : 2004 SCC (Cri) 733 : 2004 (109) DLT 304 : 2004 (118) Comp Cas 396 held at paragraph 105 as follows: "105.(iii) The breach of policy condition e.g. disqualification of driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(ii) of S.149, have 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 are, 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 said burden would be discharged, inasmuch as the same would depend upon the facts and circumstances of each case. (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 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 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 S.149(2) of the Act. (Emphasis supplied by us)"� In this case, that burden was not discharged by the insurance company. Against a claim for Rs.2,50,000/-, the Tribunal awarded only Rs.54,500/- with interest. We are of the view that since fundamental breach of policy conditions or negligence of the insured is not proved, the right of recovery granted to the insurance company is not correct and the insurance company is liable to pay the compensation. If the claim was filed by an employee or owner, such a view could not have been taken. But, here, it is third party liability and the observations of the Supreme Court in Swaran Sing's case can be squarely applied. On the facts and circumstances of this case, the insurance company cannot recover the amount from the insured and it has to indemnify the insured. The appeal is allowed.