Lauls Limited v. National Insurance Co. — 2024 DIGILAW 1222 (SC)

ORDER : 1. Leave granted. 2. The captioned appeals by special leave petition are directed against the common judgment and order dated 14.07.2023 passed by the High Court of Delhi at New Delhi in MAC.APP Nos.447/2015 and 925/2014 arising from the award dated 13.08.2014 in Suit No.77/2011. 3. The former appeal has been filed by the owner of the offending vehicle involved in the accident in question and the later appeal has been filed by the petitioner. For convenience, hereinafter in this order, we refer to the parties in accordance with their rank and status in the suit before the Motor Accidents Claims Tribunal unless otherwise mentioned specifically. On 18.06.2009, Amarpreet Singh, the son of the petitioner met with an accident involving the vehicle belonging to respondent No.2, the owner of the vehicle. He succumbed to the injuries sustained in the accident and therefore, claimant filed the aforesaid suit. After going through the evidence, the tribunal awarded an amount of Rs.33,75,000/-as compensation. At the same time, the tribunal found that the license of respondent No.1 in the suit viz., driver of the offending vehicle, was a fake one. The Insurance Company saddled with the liability to satisfy the compensation awarded, of course, with the right to the insurer to recover it later. In other words, respondent No.3-insurance company was exonerated from the liability to indemnify the owner of the vehicle, but made to pay and recover. Against the judgment both the insured and the insurance company preferred appeals, respectively as MAC.APP Nos.925/2014 and 447/2015 respectively. MAC.APP No.447/2015, was filed, essentially, by the owner challenging the exoneration of the insurance company from indemnifying him. The High Court passed the impugned passed the impugned judgment in the appeals on 14.07.2023 whereunder MAC appeal No.925/2014 was partly allowed and MAC appeal No.447/2015 was dismissed. MAC appeal 925/2014 was partly allowed and the compensation was reduced from Rs.33,75,000/-to Rs.16,33,000/-and the award of interest was maintained. It was further ordered thus: - “52. In MAC Appeal 925/2014, this Court vide order dated 14.10.2024, noted the submission of the learned Counsel for the Insurer that the awarded amount has been attached by the learned Claims Tribunal and perhaps released to the Claimants. This Court observed that if the said amount is not released, 50% is to be released to the Claimant and balance 50% is to be kept in an FDR. This Court observed that if the said amount is not released, 50% is to be released to the Claimant and balance 50% is to be kept in an FDR. If the learned Claims Tribunal kept 50% of the awarded amount in an FDR, the same shall be released to the Insurer. If it is not available, the Insurer will be at liberty to recover the same from the Claimants.” 4. We firstly, consider the appeal preferred by the petitioner. It is submitted on behalf of the petitioner/appellant in the later appeal that the petitioner would be satisfied if the quantum of compensation awarded by the Tribunal, which was interfered with as relates the quantum of compensation, is restored. In such circumstances, we will proceed to consider the former appeal to find out whether the impugned judgment to the extent it reduced the quantum of compensation invites interference or not. 5. Necessarily, the question whether exoneration of the insurance company to indemnify the owner of the vehicle is also a question, then to be considered. Certainly, that shall not deter us from considering the first question. 6. Heard the learned counsel for the claimant, the learned counsel for respondent No.3-insurance company and respondent No.2-the owner of the vehicle. 7. It is not in dispute that the son of the claimant succumbed to the injuries sustained in an accident involving the vehicle belonging to the respondent No.2, on 18.06.2009. On the date of the accident, he was aged 21 years and was a 3rd year student of Engineering in Electronics & Communication discipline at Advanced Institute of Technology and Management, Delhi, Mathura Road, Aurangabad, Faridabad, Haryana. A scanning of the judgment of the tribunal would reveal the fact that the deceased was a student of Engineering course and the future prospects he would have had but for the untimely death and all other relevant aspects were considered to arrive at the quantum of compensation. It is such a consideration that ultimately led to the determination of compensation as Rs.33,75,000/-. In such circumstances, the question is whether the High Court was justified in reducing the compensation awarded by the Tribunal from Rs.33,75,000/- to Rs.16,33,000/-. 8. The impugned judgment would reveal that fixation of the monthly income of the deceased as Rs.20,000/-for calculation purpose was interfered by the High Court and it was re-fixed as Rs.10,000/-. In such circumstances, the question is whether the High Court was justified in reducing the compensation awarded by the Tribunal from Rs.33,75,000/- to Rs.16,33,000/-. 8. The impugned judgment would reveal that fixation of the monthly income of the deceased as Rs.20,000/-for calculation purpose was interfered by the High Court and it was re-fixed as Rs.10,000/-. It is a fact that both the tribunal and the High Court fixed the monthly income of the deceased only notionally and in other words, on guess work. On going through the impugned judgment, we could not find any sustainable reason for effecting reduction in the monthly income by the High Court. Undisputedly, the deceased was then aged only 21 years and was a student of 3rd year engineering course in Electronics & Communication discipline at Advanced Institute of Technology and Management, Delhi. In such circumstances, merely by referring to the evidence of PW2 who was a classmate of the deceased and that he was getting only an amount of Rs.2,40,000/-per annum, the tribunal could not have refixed the monthly notional income merely because PW2 who was his classmate on being employed with a firm was getting a salary of Rs.2,40,000/- only. That certainly cannot be a reason to say that the deceased also would have obtained only that much income annually had he outlived the accident and successfully completed the course and got employment elsewhere. Certainly, it depends upon the place and status of employment which might have obtained and various other imponderables. Be that it may, on a careful consideration of the evidence on record, we are of the considered view that there was absolutely no reason or justification for the High Court to interfere with the moderate monthly income fixed by the tribunal for calculation purpose taking into account various relevant aspects. 9. Section 168 of the Motor vehicles Act, 1988, mandates grant of just compensation, for doing so, certainly taking into account established factors have to be looked, but that does not mean that the power to presume is totally outside its scope, especially, in the case of a claim for the accidental death or injury of a student or of an employed or a self-employed person. The upshot of the discussion is that there was no justification in reducing it to fifty per cent of what was fixed by the Tribunal. The upshot of the discussion is that there was no justification in reducing it to fifty per cent of what was fixed by the Tribunal. Taking into account the overall circumstances, we do not find any reason to hold that grant of Rs.33,75,000/-by the Tribunal as award was exorbitant in view of the facts and factors involved in the case and hence, an appellate interference with the quantum of compensation was unwarranted. In such circumstances, the compensation awarded by the tribunal in Suit No.77/2011 is restored. 10. Once we restore the quantum of compensation awarded by the tribunal, the surviving question is whether the tribunal was justified in exonerating the first respondent to indemnify respondent no.2, the owner of the offending vehicle. The main reason assigned is that there was no valid licence for respondent no.3 who was driving the vehicle at the time of accident. While considering the said question which driver was not having a driving licence, rather, the driving licence produced before the tribunal was a fake one, we are of the considered view that while considering the said question, the decision of this Court in IFFCO Tokio General Insurance Co. Ltd. vs. Geeta Devi and Others (2023) SCC OnLine SC 1398, more particularly, Para (13) of the said decision is worthy for reference, in the context of the case, which reads as under:- “13. Further, in the context of cases where the driver’s licence was found to be fake, the Bench observed that the question would be whether the insurer could prove that the owner was guilty of willful breach of the conditions of the insurance policy. It was pointed out that the defence to the effect that the licence held by the person driving the vehicle was a fake one would be available to the insurance company but whether, despite the same, the plea of default on the part of the owner has been established or not would be a question which would have to be determined in each case. The earlier decision in United India Insurance Co. The earlier decision in United India Insurance Co. Ltd. vs. Lehru and others4 was considered and the Bench observed that the ratio therein must not be read to mean that an owner of a vehicle can, under no circumstances, have any duty to make an inquiry with regard to the genuineness of the driving licence and the same would again be a question which would arise for consideration in each individual case. The argument that the decision in Lehru (supra) meant that, for all intent and purport, the right of the insurer to raise a defence that the licence was fake was taken away was, however, rejected as not being correct and it was held that such a defence can certainly be raised, but it will be for the insurer to prove that the insured did not take adequate care and caution to verify the genuineness or otherwise of the licence held by the driver. The findings summed up by the Bench, to the extent presently relevant, are as under: ‘(iii) The breach of policy condition e.g. disqualification of the driver or invalid driving licence of the driver, as contained in sub-section (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 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 a duly licensed driver or one who was not disqualified to drive at the relevant time. (iv) 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. (v) The court cannot lay down any criteria as to how the 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 the 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 the 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 insurer 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.’” 11. Para (13) of the said decision would reveal that though even after the decision in United India Insurance Co. Ltd. vs. Lehru and Others (2003) 3 SCC 338 , the insurance company is having a right to raise a defence that the licence was fake, but at the same time, in IFFCO Tokio General Insurance Co. Ltd. (Supra), this Court held that even though that right was still available to the insurer, it is for the insurer to prove that the insurer did not take adequate care and caution to verify the genuineness and otherwise, of the licence held by the driver. 12. A careful analysis of the award passed by the tribunal and also the impugned judgment passed by the High Court would reveal that this crucial factor did not gather due attention of the tribunal as also of the High Court. It is the fact that the insurer could not prove that the insured viz. the respondent no.2 did not take adequate care and caution to verify the genuineness or otherwise, of the licence held by the driver. It is the fact that the insurer could not prove that the insured viz. the respondent no.2 did not take adequate care and caution to verify the genuineness or otherwise, of the licence held by the driver. In view of the above, we have no hesitation to hold that the insurer, the first respondent was not liable to be exonerated from the liability to indemnify the second respondent, the owner of the offending vehicle. 13. In that view of the matter, the concurrent finding of the tribunal and the High Court that the first respondent, insurer is not liable to indemnify the second respondent calls for interference. Accordingly, the civil appeal arising out of SLP(C) No.22793/2023 is allowed to the extent of restoring the quantum of compensation awarded by the Tribunal. In other words, the amount awarded i.e. Rs.33,75,000/-is restored and the order maintaining the ratio of interest viz., 9 % per annum is retained as awarded by the Tribunal and maintained by the High Court. 14. Civil Appeal arising out of SLP(C) No.23246/2023 is allowed and the order to the effect of the order of exoneration of the first respondent to indemnify the second respondent stands reversed and it is ordered that the liability of the second respondent, as mentioned above, shall be indemnified by the first respondent, the insurance company. Pending application(s), if any, shall stand disposed of.