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2016 DIGILAW 498 (JK)

United India Insurance Co. Ltd. v. S. Avtar Singh

2016-10-03

B.S.WALIA, R.SUDHAKAR

body2016
JUDGMENT 1. Appeal by the Insurance Company challenging the order dated 09.12.2009 of the J&K State Consumer Disputes Redressal Commission, Jammu (hereinafter for short, ‘State Commission’) rejecting the plea of the appellant-Insurance Company that they are not liable to compensate the owner of the vehicle, which vehicle got damaged in the accident because the driver of the vehicle did not have a valid driving license. 2. The 2nd issue raised by the appellant is that it is a case of over loading and, therefore, breach of contract of insurance. 3. The 3rd issue raised is on the quantum of compensation. 4. On the first plea, it is argued that in the course of hearing before the State Commission, records were produced which is Annexure-C with the present appeal, to state that the deceased-driver, who drove the vehicle which suffered an accident on an ill-fated day, did not have a valid driving license and therefore, placing reliance on Annexure-C plea is taken that the State Commission had erred in granting compensation. The condition of the policy makes it clear that the breach of condition of policy disentitles the claimant from compensation. 5. This argument is repelled by the respondent’s counsel in the following manners-- “One of the issues as is evident from record related to the driving license. It was insisted before the Tribunal that as the driver of the offending vehicle was not having a valid and effective license at the time of accident, the appellant Insurance Company was not under an obligation to indemnify the owner on account of breach of an essential condition of Insurance Policy/contract. The Tribunal on going through the evidence brought on record answered issue No. 3 in affirmative. It held that driver of the offending vehicle was not having a valid and effective driving license at the time of accident. The Tribunal, nonetheless, held the appellant Insurance Company liable to indemnify the owner on the ground that it failed to prove that the owner of the vehicle had not been taken adequate steps while employing its driver who also lost his life in the tragic accident that he was in possession of a valid and effective driving license. The Tribunal while holding so, relied on law laid down in AIR 2008 SC 1073 .” 6. The Tribunal while holding so, relied on law laid down in AIR 2008 SC 1073 .” 6. Referring to paragraph No. 6 of the Award, counsel would state that there is no such pleading before the State Commission at the first instance. At the time of arguments, this document was placed and the State Commission did not accept the plea holding as follows-- “6. We fail to understand why the OP has not produced this record which is now being produced on the application made by one Mr. P.S. Chandel at proper time that is with filing of written version in order to support the plea that the license was fake. The member of the license was not found in the record of computer. It cannot be said that it was a fake license. Under the Insurance Act only a licensed investigator/surveyor has the authority to look into the claims of the parties but nothing is shown on records that Mr. P.S. Chandel had license issued in his name by the competent authority under the Insurance Act to act as an investigator. The report of RLA which is being referred by Mr. P.S. Chandel Advocate in his letter dated 15.5.08 addressed to the Divisional Manager United India Insurance Shimla is also of doubtful nature as the seal and designation of author is not legible. The Hon’ble J&K High Court in the case of National Insurance Co. v. Hardeep Singh 2007 (I) SLJ has held that “if the authority renewing the driving license is not the authority which issued the driving license it has to intimate the fact of renewing to the authority which issued the driving license-if the driving license is fake one and has not been issued by the issuing authority, which the applicant alleged to have got issued, then the issuing authority will inform the renewing authority that no such license has been issued by the said authority and if the issuing authority is not intimated about this fact then the renewing authority will presume that the driving license has been issued”. 7. Learned counsel for the respondent further pleads that the owner of the vehicle was justified in accepting the license of the deceased-driver because the said license was renewed for four times by the Registering Authority at Jammu and therefore, he had reason to believe that he was holding a valid driving license. 7. Learned counsel for the respondent further pleads that the owner of the vehicle was justified in accepting the license of the deceased-driver because the said license was renewed for four times by the Registering Authority at Jammu and therefore, he had reason to believe that he was holding a valid driving license. The factum of renewal of the license for four terms is not in dispute. 8. He further pleads that in the case before the Motor Accidents Claims Tribunal on claims made by the dependents of the deceased and by the injured-claimant, this plea of fake license was rejected as not proved. Further plea of the respondent’s counsel is that on the death of the driver, the dependents made a claim before the Workmen’s Compensation and the Competent Authority under Workmen Compensation Act, where also a plea of fake license was raised and rejected and that order of the Commission was also challenged before the High Court and confirmed. The same is reproduced as under-- “That apart on the record of the authority, Driving License was available, which has been renewed from time to time. Even if original could not be verified from the Registering Authority, but still such defence is not available to the Insurer, because the employer (owner of the vehicle) had engaged the driver, who admittedly was in possession of the driving license, which admittedly has been renewed from time to time, then vehicle was being driven for quite some time by the driver. This was enough for the employer to be satisfied, that the driver possesses valid driving license. On such basis it cannot be concluded that the terms of the Insurer’s Policy have been violated. So even if Record keeper would have appeared, still that could not make any difference. 9. On the first issue emphasis is placed on Annexure-C and the endorsement. It is, no doubt, true that the plea has been made before the Consumer Forum that the license is fake. It was proved by the document, which arose from Mr. P.S. Chandel, Advocate, who claimed to be acting as an Investigator at the request of the Divisional Manager. On the first issue emphasis is placed on Annexure-C and the endorsement. It is, no doubt, true that the plea has been made before the Consumer Forum that the license is fake. It was proved by the document, which arose from Mr. P.S. Chandel, Advocate, who claimed to be acting as an Investigator at the request of the Divisional Manager. Endorsement, no doubt, contains a seal of some Registering Authority and endorsing that there is no such licence was issued but the fact remains, the owner of the vehicle was not at fault and taking note of the fact that there was four renewal of the license by the competent authority and there was no occasion for disbelieve. To that extent, he cannot be faulted. Even otherwise, the Forum took exception to the manner in which the document was produced and made observations in paragraph No. 6 of the award. 10. Having pleaded but not proved the issue in the earlier proceedings namely that of Motor Accidents Claims Tribunal or before Commissioner Under Workmen Compensation Act, this new document which has now been put into play is an endorsement by an authority but however, it has not been proved in the manner known to law by examining the Issuing Authority. In that view of the matter on the first plea, we are not inclined to accept the belated plea of fake license. 11. Next contention raised by the appellant’s counsel is that the Insurance Company stands exonerated of its liability because of overloading of the bus, cannot stand further scrutiny in view of the decision of the Hon’ble Supreme Court in case titled ‘Lakhmi Chand v. Reliance General Insurance’ reported as 2016 (1) Law Herald (SC) 100, which is almost identical to the present case where the claim was made for compensation qua goods carrying vehicle which suffered in an accident and the Supreme Court restored the finding of the District Forum on the factum that if the overloading is not proved to be the cause of accident, then the claim cannot be rejected. Relevant paragraph Nos. 15, 16 & 18 of the judgments are reproduced hereunder-- “15. The National Commission upheld the order of dismissal of the complaint of the appellant passed by the State Commission. The National Commission however, did not consider the judgment of this Court in the case of B.V. Nagaraju v. Oriental Insurance Co. Relevant paragraph Nos. 15, 16 & 18 of the judgments are reproduced hereunder-- “15. The National Commission upheld the order of dismissal of the complaint of the appellant passed by the State Commission. The National Commission however, did not consider the judgment of this Court in the case of B.V. Nagaraju v. Oriental Insurance Co. Ltd Divisional Officer, Hassan, 1996 (3) R.C.R.(Civil) 304 : (1996) 4 SCC 647 . In that case, the insurance company had taken the defence that the vehicle in question was carrying more passengers than the permitted capacity in terms of the policy at the time of the accident. The said plea of the insurance company was rejected. This Court held that the mere factum of carrying more passengers than the permitted seating capacity in the goods carrying vehicle by the insured does not amount to a fundamental breach of the terms and conditions of the policy so as to allow the insurer to eschew its liability towards the damage caused to the vehicle. This Court in the said case has held as under-- “It is plain from the terms of the Insurance Policy that the insured vehicle was entitled to carry six workmen, excluding the driver. If those six workmen when travelling in the vehicle, are assumed not to have increased risk from the point of view of the Insurance Company on occurring of an accident, how could those added persons be said to have contributed to the causing of it is the pose, keeping apart the load it was carrying. In the present case the driver of the vehicle was not responsible for the accident. Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle, without the knowledge of the owner, cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. The misuse of the vehicle was somewhat irregular though, but not so fundamental in nature so as to put an end to the contract, unless some factors existed which by themselves, had gone to contribute to the causing of the accident.” 16. Further, in the case of National Insurance Company Ltd. v. Swaran Singh & Ors. 2004 (2) R.C.R.(Civil) 114 : 2004 3 SCC 297 a three judge bench of this Court has held as under-- “49. Further, in the case of National Insurance Company Ltd. v. Swaran Singh & Ors. 2004 (2) R.C.R.(Civil) 114 : 2004 3 SCC 297 a three judge bench of this Court has held as under-- “49. Such a breach on the part of the insured must be established by the insurer to show that not only the insured used or caused or permitted to be used the vehicle in breach of the Act but also that the damage he suffered flowed from the breach. 52. In Narvinva’s case (supra) a Division Bench of this Court observed: “The insurance company complains of breach of a term of contract which would permit it to disown its liability under the contract of insurance. If a breach of a term of contract permits a party to the contract complaints of breach to prove that the breach has been committed by the other party to the contract. The test in such a situation would be who would fail if no evidence is led. 69. The proposition of law is no longer res- integra that the person who alleges breach must prove the same. The insurance company is, thus, required to establish the said breach by cogent evident. In the event the insurance company fails to prove that there has been breach of conditions of policy on the part of the insured, the insurance company cannot be absolved of its liability. 18. It becomes very clear from a perusal of the above mentioned case law of this Court that the insurance company, in order to avoid liability must not only establish the defence claimed in the proceeding concerned, but also establish breach on the part of the owner/insured of the vehicle for which the burden of proof would rest with the insurance company. In the instant case, the respondent-Company has not produced any evidence on record to prove that the accident occurred on account of the overloading of passengers in the goods carrying vehicle. Further, as has been held in the case of B.V. Nagaraju (supra) that for the insurer to avoid his liability, the breach of the policy must be so fundamental in nature that it brings the contract to an end. Further, as has been held in the case of B.V. Nagaraju (supra) that for the insurer to avoid his liability, the breach of the policy must be so fundamental in nature that it brings the contract to an end. In the instant case, it is undisputed that the accident was infact caused on account of the rash and negligent driving of the offending vehicle by its driver, against whom a criminal case vide FIR No. 66 of 2010 was registered for the offences referred to supra under the provisions of the IPC. These facts have not been taken into consideration by either the State Commission or National Commission while exercising their jurisdiction and setting aside the order of the District Forum. Therefore, the judgment and order of the National Commission dated 26.04.2013 passed in the Revision Petition No. 2032 of 2012 is liable to be set aside, as the said findings recorded in the judgment are erroneous in law.” 12. Furthermore, in the instant case, the Motor Accidents Claims Tribunal did not accept the plea of the cause of accident as relating to overloading and that has been upheld by the High Court, therefore, such plea is not required further scrutiny. 13. The 3rd and last issue was on quantum of compensation. The Claims Tribunal and the State Forum after considering the above legal issues granted Rs. 5,15,940/-. According to the appellant’s counsel, the vehicle was insured for Rs. 6,00,000/-. The plea is that the salvage value of Rs. 1.75 lac and therefore, on the basis of the Surveyor’s report, less the salvage value, the respondent would be entitled to Rs. 4,30,000/- (Rs. Four Lac thirty thousands) along with interest as awarded by the State Commission from the date of filing of the complaint. The said plea is justified and the quantum is reduced to Rs. 4,30,000/- with interest as awarded by the State Commission. The appeal in so far as quantum alone is allowed. The appeal on other aspects discussed above stands rejected.