Research › Search › Judgment

Karnataka High Court · body

2020 DIGILAW 1252 (KAR)

Oriental Insurance Company Ltd. v. Gangaraju

2020-06-26

M.NAGAPRASANNA

body2020
JUDGMENT M Nagaprasanna, J. - Sri H.C.Vrushabhendraiah, learned counsel for the appellant. Sri V.Javahar Babu, learned counsel for respondent Nos.1 and 2 appeared through video conferencing. This appeal under Section 30(1)(A) and (AA) of the Workmen s Compensation Act, 1923 (hereinafter referred to as the Act , for short) has been filed by the claimants being aggrieved by the judgment and award dated 30.09.2011 passed by the Labour Officer and Workmen s Compensation Commissioner, Hassan Sub-Division, Hassan (hereinafter referred to as the Commissioner , for short), in case No.WCA:F:SR:30/2010. 2. Brief facts leading to filing of the case before the Commissioner are that one Sri Muniraju, son of the claimants, who was 26 years old, was driving a lorry bearing registration No.KA-52-617 and was proceeding near Nelamangala to load sand and come back. Since sand was not available, he was returning back, driving an empty lorry. On 5.11.2009 at about 4.00 p.m., when he was returning to Nelamangala and had reached a temple near Cheekanahalli, Belur Taluk, crashed into a tree and died on the spot. On the death of their son, the claimants filed a case before the Commissioner stating that their son was earning Rs.6,000/- per month as a driver and used to get Rs.100/- as batta and on the death of the sole bread winner, their livelihood is at stake as they have no means to live and claimed compensation. 3. On issuance of notice, the respondent-insurance company appeared and filed statement of objections contending that the transport vehicle was being driven by the deceased, did not have a valid driving licence to take vehicle on a public road and drive. There was gross violation of the policy conditions inasmuch as there was breach of Motor Vehicle Rules and since there was breach of the policy conditions, the insurance company was not liable to pay compensation. The monthly income and dependency of the claimants with the deceased was denied. 4. Based on the pleadings of the parties, the Commissioner framed the issues and thereafter recorded the evidence. 5. In order to prove their case, the claimant No.1 examined himself as P.W.1 and marked 9 documents as Exs.P.1 to P.9. On the other hand, the respondentinsurance company examined one witness by name H.S. Nagabushan, Senior Assistant Manager and marked two documents as Exs.R.1 and R.2. 5. In order to prove their case, the claimant No.1 examined himself as P.W.1 and marked 9 documents as Exs.P.1 to P.9. On the other hand, the respondentinsurance company examined one witness by name H.S. Nagabushan, Senior Assistant Manager and marked two documents as Exs.R.1 and R.2. The Commissioner inter alia held that the insurance company was liable to pay the compensation and determined the same at Rs.4,36,940/- with interest at 7.5% p.a. Being aggrieved, the insurance company has filed the instant appeal. 6. Learned Counsel appearing for the appellantinsurance company would contend that the deceased did not have a valid licence to drive a transport vehicle which was to carry sand and since there was breach in the policy conditions, the insurance company was not liable to pay any compensation. 7. Learned Counsel appearing for the claimants would contend that even if the deceased did not possess a valid driving licence to drive the vehicle in question, since the insurance policy was in force and admitted by the insurance company, cannot absolve its liability of paying compensation on the ground that there was breach of policy conditions. It was always open to the insurance company to pay and recover the same from the 1st respondent, the owner of the vehicle. He has placed reliance on the judgment of the Full Bench of this Court in of the case of NEW INDIA ASSURANCE COMPANY LTD. VS. YALLAVVA AND ANOTHER disposed of on 12th May 2020. 8. I have considered the submissions made by the learned counsel for the parties and have perused the record. 9. In the light of the submission of the learned Counsel for the parties, the following substantial question of law would arise for my consideration: Whether the insurance company would be liable to pay compensation to the claimants notwithstanding the fact that the deceased did not possess a valid driving licence to drive the lorry ? 10. The relationship between the 1st respondent and the deceased is not in dispute. It is not in dispute that the deceased died while discharging his duties. It is also not in dispute that the deceased did not possess a valid driving licence to drive the lorry. The insurance policy is admitted and was in force as on the date of accident. Admittedly, the policy is issued covering the risk of the driver. It is not in dispute that the deceased died while discharging his duties. It is also not in dispute that the deceased did not possess a valid driving licence to drive the lorry. The insurance policy is admitted and was in force as on the date of accident. Admittedly, the policy is issued covering the risk of the driver. When the deceased did not possess licence, the appellant insurance company is bound to raise a defence that it is not liable to indemnify the owner on account of driver not possessing a valid licence. It is no doubt true that the petition is filed under the provisions of the Act and in view of the judgment of the Hon'ble Supreme Court in the case of NATIONAL INSURANCE CO. LTD. VS. MASTAN AND ANOTHER, (2006) AIR SC 577 , I am of the opinion that the appellant insurance company is entitled to raise a defence when the deceased did not possess a valid licence. Nonetheless, the Commissioner ought to have held that the driver of the vehicle who did not possess a valid driving licence, was in breach of Section 3 of Motor Vehicles Act and consequently could not have fastened the entire liability upon the insurance company for payment of compensation. 11. The substantial question of law that has arisen for my consideration need not delve into other aspects of the matter as the issue stands covered by the latest Full Bench judgment of this Court in the case of YALLAVVA (Supra), wherein it was observed that the insurance company would be liable to pay the compensation notwithstanding the fact that the deceased or the injured did not possess a valid driving licence on the principle of pay and recover. The Hon ble Full Bench of this Court in the said case has held as follows: "ORDER OF THE COURT Questions referred:- I) If it is shown the insurance policy is not Act policy in terms of Sections 145 and 147 of the Motor Vehicles Act, but a contractual policy issued collecting extra premium indicating insurance company has enlarged its liability, will not the insurance company be liable to pay and recover even if there is any breach by the insurer? II) In such cases, is not the rule to pay and recover applicable in view of the mandate in Section 149, M.V.Act that upon issuance of policy, the insurer is bound to discharge the award as if it were a judgment debtor? Answers: i) Having regard to Section 149(1) r/w Section 149(7) whenever a case falls under Section 149(2)(a) and the same is successfully established or proved by the Insurance Company, as per the twin tests laid by the Hon ble Supreme Court in Swaran Singh, nevertheless, the insurer or Insurance Company is liable to satisfy the award vis- vis a third party and is entitled to recover from the insured. This is irrespective of, the policy being an Act policy in terms of Section 147 pertaining to compulsory coverage of risks of third parties and other classes of persons stated therein or a policy covering other risks by specific contract being entered into in that regard and where additional premium is paid by the insured i.e., a contractual policy. ii) The Insurer is liable to pay the third party and recover from the insured even if there is breach of any condition recognized under Section 149 (2), even if it is a fundamental breach (that is breach of condition which is the cause for the accident) and the insurer proves the said breach in view of the mandate under Section 149(1) of the Act. But, no such order can be passed against the insurer, if, on the facts and circumstances of a case, a finding is given by the court that the third party (injured or deceased) had played any fraud or was in collusion with the insured, individually or collectively, for a wrongful gain to themselves or cause wrongful loss to the insurer. iii) The Court can also fasten the absolute liability on the insurer, if there is any breach of condition which is enumerated under Section 149(2) of the Act or any other condition of the policy if the Insurance Company has waived breach of any such condition or has taken the special responsibility to pay by collecting extra premium by covering any type of risk depending upon facts of each case. iv) Thus, the rule of pay and recover is applicable in view of the mandate in Section 149(4) of the Act and even if there is a breach of the terms of the insurance policy, the insurer is bound to satisfy the judgment and award as if it were a judgment debtor, even if it satisfies the twin tests enunciated by the Hon ble Supreme Court under Section 149(4)(a) of the Act. v) Before passing any order on the Insurance Company to pay and recover, the Court has to examine the facts and circumstances of each case and if it finds that the victim, injured or the deceased, in a particular case, was solely or jointly responsible for breach of such fundamental condition by playing fraud or in collusion with the insured, the Court may exercise its discretion not to fasten the liability on the insurer. vi) However, the court should not adopt the above guideline as a general rule in all cases, but only under peculiar facts and circumstances of each case and on giving appropriate reasons. vii) If the Insurance Company makes out a case under Section 149(2)(b) of the Act, then also the Insurance Company has to satisfy the award so far as third party is concerned, as it is the duty of the Insurance Company to indemnify the insured on the basis of the policy of the insurance and even when the contract of insurance itself is void, nevertheless the liability to indemnify the insured would arise and insurer is entitled to recover from the insured. viii) Thus, in a case where Section 149(2)(b) applies and the Insurance Company successfully establishes that the policy is void, in such a case also, the insurer is not absolved of its liability to satisfy the judgment or award as rights or obligations would flow even from a policy which is void vis- -vis third party. In such a case, the insurer is not completely absolved of its liability, the insured would have to satisfy the award vis- -vis the third party and recover from the insured the amount paid to the third party and may also have a right to seek damages from the insured. 12. In such a case, the insurer is not completely absolved of its liability, the insured would have to satisfy the award vis- -vis the third party and recover from the insured the amount paid to the third party and may also have a right to seek damages from the insured. 12. In the light of the law declared by the Hon ble Full Bench of this Court in Yallavva s case (Supra), the substantial question of law that has arisen in this instant appeal is answered in favour of the insurance company, however, that would not mean that the claimants would not be entitled to the compensation determined by the Commissioner, the appellant-insurance company will have to satisfy the compensation and recover the same from the owner of the vehicle. 13. In the result, I pass the following: ORDER (i) The appeal is allowed in part. (ii) The judgment of the Commissioner dated 30.09.2011 passed in case No.WCA:F:SR:30/2010 is modified absolving the liability of insurance company to satisfy the amount of compensation to claimants. (iii) The modification of the impugned judgment and award will not come in the way of the claimants being entitled to the compensation determined. (iv) The insurance company is directed to make good the amount of compensation determined by the Commissioner and recover the same from the owner of the lorry involved. (v) The amount in deposit shall be transferred to the Labour Officer and Workmen s Compensation Commissioner, Hassan Sub- Division, Hassan, forthwith.