HONOURABLE Dr. JUSTICE B.SIVA SANKARA RAO
M.A.C.M.A.Nos.2138,2539 of 2007 and 2275 of 2008
COMMON
JUDGMENT:
These three appeals, filed by the Insurer,
having been aggrieved by the award of
the Tribunal in O.P.No.630 of 2005 dated 27.04.2007(MACMA No.2138 of 2007),
O.P.No.562 of 2005 dated 14.06.2007(MACMA No.2539 of 2007) and O.P.No.237 of
2006 dated 23.04.2008 (MACMA No.2275 of 2008)
on the file of the learned
Chairman of the Motor Accidents Claims Tribunal–cum-District Judge, Khammam (for
short, ‘Tribunal’) against
respective respondents under Section 166 of the Motor Vehicle
Act, 1988 (for short, ‘the Act’).
2.
Heard Sri Kota Subba Rao, learned standing counsel for the appellant, Sri Kouturu
Vinaya Kumar,(in MACMA No.2138 of 2007), Sri Repakula Nageswara Rao (in MACMA
No.2539 of 2007) Sri V.Brahmaiah Chowdary(in MACMA No.2275 of 2008) learned
counsel for the claimants and the owner of the crime vehicle represented by Sri
K.Venkata Rao (same owner and same vehicle). The parties hereinafter are referred to as
arrayed before the Tribunal for the sake of convenience in the appeal.
3. The contentions of the appellant-Insurer in the grounds of
appeal in all the appeals as well as submissions during course of hearing in
nutshell are that the award of the Tribunal is contrary to law, weight of
evidence and probabilities of the case in ordering pay and recovery rather than
totally exonerating the insurer, that too, without directions to safeguard
recovery, hence to allow the appeals; further that In MACMA No.2275 of 2008 and
2138 of 2007, the Tribunal failed to see that the owner, driver and insurer of
the opposite vehicle are also the proper and necessary parties to the case, the
Tribunal failed to see that there is no valid and requisite driving licence to
the driver of the tanker bearing No.AP-29 T 3730 at the time of accident,
that the Tribunal failed to see driving
licence is one of the valid defences available under Section 149 of M.V.Act and
there is no liability at all on the part of Insurance company, that the
Tribunal failed to see that the driver is the proper and necessary party for
the effective disposal of the case and this is a clear case where the driver
does not have valid and requisite driving licence and hence to exonerate the
Insurer from liability by setting aside the pay and recovery direction in the
awards of the Tribunal by allowing the appeals.
4.
The contentions of the owner of the vehicle represented by Sri K.Venkat Rao,
that for this Court while sitting in appeal there is nothing to interfere.
There is nothing to direct pay and recover but for fixing joint liability for
no evidence of the driver was allowed by the owner with conscious knowledge
intentionally to drive the vehicle with any defect in licence.
5.
Whereas, it is the contention of the claimants in all the appeals in support of
the contention of the owner to fix joint liability and not a case for
exoneration much less for pay and recovery directions and the other contention is
the quantum awarded by Tribunal is low.
6.
Now the points
that arise for consideration in the appeal are:
1.
Whether the award of the Tribunal with pay and recover
directions finding driver has no valid driving licence at the time of accident
is unsustainable and if so the Insurer to be exonerated if not with what
directions to safeguard the pay and recover?
2.
To what result?
POINT-1:
7.
The facts of the case are that, on 02.01.2005 the deceased Srinivasa Rao (in
O.P.No.237 of 2006), Veerababu (in O.P.No.630 of 2005)and Athukuri Anjaneyulu
(in O.P.No.562 of 2005) along with some others were traveling from Manugur in a
van bearing No.AP-16-W-3749 belongs to 1st respondent in all appeals
insured with the 2nd respondent-Insurer when they crossed Ambedkar
Nagar village, Thallada Mandal, at about 10.30 p.m, the driver of tanker
bearing No.AP 29 T 3730 came in opposite
direction from Wyra side which was driven by its driver in a rash and negligent
manner with high speed and dashed against the van due to which the deceased sustained
multiple bleeding injuries all over the body and while undergoing treatment deceased
Srinivasa Rao (in O.P.No.237 of 2006), and Athukuri Anjaneyulu (in O.P.No.562
of 2005) were succumbed to injuries and deceased Veerababu (in O.P.No.630 of
2005) died while shifting to hospital, which occurrence is covered by Ex.A.1
FIR and Ex.A.2 charge sheet. The learned Tribunal basing on the oral and
documentary evidence on record, in O.P.No.630 of 2005 awarded in all
compensation of Rs.2,94,000/-(Rupees two lakh ninety four thousand only), in
O.P.No.237 of 2006 awarded in all compensation of Rs.2,52,000/-(Rupees two lakh
fifty two thousand only) and in O.P.No.562 of 2005 awarded in all compensation
of Rs.4,88,000/-(Rupees four lakh eighty eight thousand only) with interest at
7.5% p.a. against the Insurance Company initially
to pay to the claimants and then recover from the owner of the crime vehicle in
all three appeals.
8.
The fact that the accident taken place on 02.01.2005 at 10.30p.m. involving two
vehicles not in dispute. The 2nd
respondent is Insurer among the two respondents including the owner of the
crime tanker bearing No. AP 29 T 3730 in the respective claims by the claimants
for death of three persons in said accident while they were proceeding along
with others in the van AP16W 3749 coming from opposite direction dashed, as a
result many sustained injuries and three among total six that were succumbed.
It is not a case to say there is any contributory negligence that is required
to be decided in the appeal by interfering with the finding of the Tribunal.
The accident was the result of rash and negligent driving of the crime tanker
of the 1st respondent-insured with the 2nd respondent.
Having regard to the above, with that finding for this Court while sitting in
appeal there is nothing to interfere but for the core of contention regarding
the Insurer to be exonerated or with pay and recover direction to be held good or
with any further directions to safeguard the interest of the Insurer to be seen.
9.
In this regard, the evidence before the Tribunal clearly speaks Ex.B.1 is the
driving licence extract of the driver of the crime tanker which shows he has no
valid driving licence to drive the crime vehicle. R.W.1 owner of the vehicle and R.W.2 employee
of the RTA in proof of the same examined and Ex.A.4 MVI report also speaks no
licence produced but for what R.W.1 deposed of he has no conscious knowledge
about so called imperfect licence of the driver having verified and tested from
skill from licence produced and also while obtaining the policy before the
Insurer. It is at best serves the purpose to say the owner did not
intentionally allow with conscious knowledge to commit breach of the permit and
policy conditions in entrusting the vehicle to a driver with imperfect licence.
However, the fact is a fact that is proved of he has no valid driving
licence. Once that is the case, what the
law speaks is from the policy covers risk of third parties if the driver has no
valid driving licence in the absence of showing the owner intentionally and
deliberately allowed to commit breach the Insurer has to first to pay and then
recover. The law is well settled right
from the Apex Court’s expression in Lehru,
Nanjappan, Swaran Singh, Sardari and Iyyappan.
10. Now coming to decide whether the insurer can be exonerated from
liability to indemnify the insured to the third party claimants concerned it is
opt to refer the following propositions:
i) No
doubt in National Insurance Company Limited Vs. Vidhyadhar Mahariwala &
Others[1], the two judge bench of the Apex Court in this
decision by referring to National Insurance Company Limited Vs.
Swaran Singh & Others[2] apart from other expressions in National
Insurance Company Limited Vs. Kusum Rai & Others[3] and Oriental Insurance Company Limited Vs.
Nanjappan & Others[4]
and Ishwar
Chandra & Others Vs. Oriental Insurance Company Limited & Others[5] held that the
insurer is not liable to indemnify the owner, when the driver has no license to
drive the crime vehicle.
ii) In
Ishwar Chandra (supra) it was held
by the two judge bench that
the driver’s licence when expired 30 days prior to the date of accident and no
renewal application filed even by date of accident to say a renewal dates back
to date of application, it is suffice to hold the driver has no valid licence
as on date of accident.
iii) In Kusumrai (supra) it was held by the two judge bench
that, the vehicle was used as taxi (commercial) and the driver is required to
hold appropriate licence but not having valid commercial vehicle licence and
from that breach, the insurer is held entitled to rise the defence.
iv) In Vidhyadhar Mahariwala (supra)—in para -8 of the judgment, it was
observed that in Swaran Singh (supra)whereupon
it was held as follows:-
“45. Thus, a person whose license is
ordinarily renewed in terms of the Motor Vehicles Act and the Rules framed
thereunder, despite the fact that during the interregnum period, namely, when
the accident took place and the date of expiry of the license, he did not have
a valid license, he could during the prescribed period apply for renewal
thereof and could obtain the same automatically without undergoing any further
test or without having been declared unqualified therefore. Proviso appended to
Section 14 in unequivocal terms states that the license remains valid for a
period of thirty days from the day of its expiry.
46. Section 15 of the Act does not
empower the authorities to reject an application for renewal only on the ground
that there is a break in validity or tenure of the driving license has lapsed,
as in the meantime the provisions for disqualification of the driver contained
in Sections 19,20,21,22,23 and 24 will not be attracted, would indisputably
confer a right upon the person to get his driving license renewed. In that view of the matter, he cannot be said
to be delicensed and the same shall remain valid for a period of thirty days
after its expiry.”
v) In Ram Babu Thiwari Vs. United Insurance Company Limited[6] by referring to Ishwar Chandra, Kusum Rai, Swaran Singh (supra) among other expressions,
held that when a driving license of the driver of the offending vehicle was
expired about three years prior to accident and it was got renewed only
subsequent to the accident it was held as violation of the terms of the policy
by referring to Kusum Rai (supra)
followed in Ishwar Chandra (Supra)
observed that in view of the Section 15(1) of the Act even the license
after period of expiry remains valid for thirty days to
renew meantime any renewal subsequently would be renewed from the date of
renewal only to say as on the date of accident even be subsequent renewal long
after thirty days expiry of the statutory period not a valid renewal to say no
valid license to exonerate the Insurer and thus exonerated the insurer.
vi) The above decisions other than Swaran singh (Supra) mostly speak of no
valid license as on the date of accident though earlier it was from its lapse and timely non-renewal
or holding one license not valid to
drive other type of vehicle.
vii) On perusal of Swaran Singh (Supra) referring earlier expressions speaks several
categories of cases as to such imperfect license or lapsed license with no
license in subsistence or a fake license or even driver with no license at
all. An extreme case of this type of
driver having no license at all driving the vehicle knowingly without even
application for lilcence and without experience to drive even admittedly and in
his saying it is to the willful and conscious knowledge of the owner as a
fundamental breach.
Coming to the cases no license is concerned:-
viii)
In Sardari vs. Sushilkumar[7]- the
facts show one Jageeru , Tonga
ix)
In UIIC Vs. Gianchand[8], it
was observed that when the insured handed over the vehicle to an un-licenced
driver, insurer would be exonerated from liability to meet III party claims.
x)
In Swaran Singh (three judges
bench-supra) it was laid down that the owner of the vehicle has a
responsibility to see that no vehicle is driven except by a person who doesn’t
satisfy Sections 3 & 4 of the MVAct.
In a case where the driver admittedly did not hold licence and the same
was allowed consciously to be driven by the owner of the vehicle by such person
insurer in its defence succeed to avoid liability. The matter, however, may be different
where a disputed question of fact arises as to driver had a licence or owner
committed a breach of the policy terms by consciously allowing a person to
drive without having a valid driving licence.
xi)
In NIAC Vs. Prabhulal[9] it
was a claim arisen out of Consumer District Forum holding no liability of the
insurer against the National Consumer Commission’s verdict fixing
responsibility.
xii)
In Prem Kumari Vs. Prahlad Dev[10] it
was also observed that owner of the vehicle cannot contend no liability to
verify the fact as to whether the driver possessed a valid licence or not.
xiii)
By referring all these expressions at Para 9 of the Judgment of the Apex Court
in Saradari (supra), the Apex Court
did not choose to interfere with the finding of the tribunal confirmed by the
High Court, in not chosen to make liable the insurer.
xiv)
In Surina Durvasulu Vs. Bhavanarayana
Murthy[11]
Para 14 it was held that when the driver had no valid driving licence to drive
tractor and the charge sheet also mentions a penal provision for violation of
the same in driving with no licence and nothing deposed by owner despite
contention of Insurance Company, that he has taken all necessary precautions to
entrust the vehicle to a person who had valid driving licence, insurance
company not made liable holds good.
11. The other type of cases are driver possessing
a fake license and not any real license to drive and driving the vehicle
entrusted by owner it all depends upon the facts as to the owner consciously by
knowing it is a fake license allowed or believing as genuine allowed and what
extent the liability to enquire lies on the owner concerned, the cases on that
principle are as follows: -
i) In National
Insurance Company Limited Vs. Laxmi Narain Dhut[12],
it was held by the Apex Court referring to Swaran
Singh (supra) and New India
Insurance Company Limited Vs. Kamala[13]
at page 41 that the defense available to the Insurer to indemnify the insured
or not (any) of a third party claim
under Section 149 of the Act includes the license claim as genuine is
fake. In that case on facts found the
license possessed was fake and it was even renewed by the Regional Transport
Officer concerned ignorant if the fact or otherwise held that mere renewal of a
fake license cannot cure the inherent defect as renewal cannot transform a fake license as genuine as
held in Kamala(supra) was the
conclusion arrived.
ii) The other decision on that is Oriental Insurance Company Limited Vs.
Prithvi Raj[14]
which is also a fake license and proved so and held that a renewal cannot take
away the effect of fake license to make the Insurer liable and the Insurer
cannot thereby be liable to that conclusion, they followed Kamala (Supra) besides United India Insurance Co. Ltd. V. Lehru[15]
(supra).
iii) The other decisions regarding fake license is
National Insurance Company Limited Vs.
Dupati Singaiah[16]
referring to Lehru, Swaran Singh, Gain
chand, Prithvi Raj, Prahlad dev(supra),
not to mention Oriental Insurance
Company Limited Vs. Meena Variyar[17]
earlier expression in Scandia Insurance
Company Limited Vs. Kokila Ben Chandravadan[18]
and United India Insurance Company
Limited Vs.Rakesh Kumar Arora[19]
held that in Swaran Singh (surpa) at
para-102 it was held that an insurer is entitled to raise a defense in a claim
filed under Section 163-A and 166 of the Act, in terms of Section 149
(2)(a)(ii) of the Act, as to breach of the policy conditions including
disqualification of the driver or invalid license of the driver etc., and to
avoid such a liability the defense has to be proved by the insurer with a plea
raised to establish such breach. However, it was not laid down in Swaran Singh (supra) any criteria as to
how said burden would be discharged. Thus same would depend upon facts and
circumstances of each case. The question as to whether owner has taken a
reasonable care to find out as to whether driving license produced by driver is
fake or otherwise does not fulfill the requirements of law or not will have to
be determined in each case. If available
at the time of the accident was driven by a person having learner’s license,
Insurance Company would be liable to satisfy the claim. Thus, unless the
Insurer proves willful breach of specific conditions of policy they cannot
escape from liability. In Swaran Singh
(supra), at para-85 and 94 as well as 102(3) observed that it may be true that
a fake or forged license is as good as no license, however, the question is
whether Insurer must prove that owner was guilty of willful breach of the
conditions of the policy in the contract of Insurance as considered with some
details in Lehru (Supra). To agree
said conclusion of Swaran singh and
Lehru (supra), it was observed in Dhupati
Singaiah (supra) at para-820 that in most of cases drivers and owners
remaining ex-parte by taking it for
granting that in the event of negligence being proved, the Insurance Company
would discharge its statutory liability.
It is the only Insurer that has to lead evidence both on the question of
negligence and on the question of liability, therefore, main defense available
to the Insurer is under Section 149(2) of the Act when if Insurer leads
evidence to show license found in the vehicle involved in the accident is fake
or the driver had no license or valid license,
it can be taken sufficient proof of breach of conditions as per Section
149 (2)(a) of Act therefrom Section 149(2)(a)(ii) of the Act enables the
Insurer to escape from liability if shown that there has been a breach of
specified condition of policy and on facts therefrom held Insurer to be
exonerated from liability.
iv) In Ashok Gangadhar Maratha V. Oriental Insurance Co. Ltd[20] and Roshanben (supra) also the
above principles of law are reiterated in exonerating the insurer.
v)
In fact, the three judges bench judgment of the Apex Court in Swaran Singh (supra) well laid down the
law in this regard referring to Lehru (supra) and Kamala (supra) that followed the earlier three-Judges bench
decision Sohan Lal Passi V. P.Sesha
Reddy[21]
wherein the reference was answered upholding the view taken Skandia Insurance Co. Ltd. V. Kokila Ben
Chandravadan[22]
and the principle laid down therefrom in Swaran Singh (supra) was approved and reiterated even in the
subsequent decisions including the above but for distinguishing for the facts
on hand in each of the cases as held by the Apex Court in
NIC Vs. Geetabhat[23] that the principle is the same but for any deviation from factual matrix of each case if at all to say non-liability.
NIC Vs. Geetabhat[23] that the principle is the same but for any deviation from factual matrix of each case if at all to say non-liability.
vi) The Apex court in Lehru (supra), Swaran Singh (supra), Nanjappan
(supra), Geetabhat (supra) and several
other expressions in the cases relating to no license at all or imperfect and no
valid license held that even it is one of breach of terms of policy and
violation of rules, since the policy otherwise covers risk, though denied
liability from no valid license, the insurer is to pay and recover. The insurance company cannot escape liability
unless the violation proved willful with conscious knowledge and fundamental,
every violation of policy conditions cannot be considered to escape the insurer
from liability to indemnify the owner (insured) to the 3rd party
claimants.
vii) Even in Geetabhat (supra) it was held reiterating the principle laid down
in the above decisions after referring the above among other several decisions
that when insurer seeks to avoid liability on ground of fake or no licence of
driver of the vehicle of the insurer, but for saying no licence issued by RTO
in name of the driver, even taken alleged licence as fake, insurer has to pay
to the third party claimants and recover from insured.
viii) In fact, in Swaran Singh's
case (supra), the Apex Court
xv) In Swaran Singh (supra)
it was held that the Tribunals and Courts in exercise of their jurisdiction to
issue any direction for pay and recovery considering, depending upon facts and
circumstances of each case. In the event
of such a direction has been issued despite arriving at a finding of fact to
the effect that the insurer has been able to establish that the insured has
committed a breach of contract of insurance under Section 149(2)(a)(ii) of the
Act, the insurance company shall be entitled to realise the award amount from
owner or driver, as the case may be, in execution of the same award in view of
Sections 165 and 168 of the Act.
xvii) In paragraph 81 of Swaran Singh (supra), it was observed that
right to avoid liability in terms of Section 149(2) is restricted as has been
discussed herein before. It is one thing to say that the insurance companies
are entitled to raise a defence; but it is another thing to say that despite
the fact that its defence has been accepted, having regard to facts and
circumstances of the case, the Tribunal has power to direct them to satisfy the
decree at the first instance and then direct recovery of the same from the
owner. These two matters stand apart and require contextual reading.
xviii) The Supreme Court in subsequent judgments have not treated the
previous judgments including Swaran
Singh (supra) as laying down unexceptionable principle that in every claim
brought before the Tribunal, the insurance company should be directed to pay
compensation amount first even though its defence was found accepted, as
evident from some of the later expressions like in National Insurance Company Limited Vs. Bommithi Subbhayamma &
Others[24], (a case of passenger in a goods vehicle).
xix) By referring to the above, from paragraph 20, the High Court in Sampoorna (supra) observed that on the
strength of the discussion undertaken above, it is not possible for this Court
to treat the judgment in Swaran Singh
(supra) as containing mandatory directions to Tribunals and Courts to
invariably direct the insurer to pay at first instance and recover from owner
of the vehicle even though they are held not liable. Pending resolution of the issues by the
larger bench of the Supreme Court, it would be reasonable to understand the
judgment in Swaran Singh (supra) as
leaving discretion to the Tribunals and the Courts to give appropriate
directions depending upon facts and circumstances of each case.
xx) By applying the ratio in Swaran
Singh (supra) at para-21 of the judgment, the High Court held that some
amount that was already deposited by the insurance company, which holds good to
withdraw, and for the rest, insurance company is not liable.
12.
In fact besides Lehru (supra), Swaran Singh’s (supra) and Nanjappan
(supra) in holding that from lack of license or fake license or imperfect or
defective license, the insurer can be ordered firstly to satisfy the claimants
by indemnifying the owner and then recover from owner and driver;
i)
Even in the subsequent expressions of the Apex Court
ii)
Even in the recent expression of the High Court in Jaya Prakash Agarwal V. Mohd. Kalimulla[26]
having considered the law at length taken similar view, while saying at para-39
that each case has to be decided on its own facts and circumstances.
iii)
Even in the latest expression of the Apex Court in S.Iyyappan Vs. United India Insurance Company[27] a
two judge bench of the Apex Court held that even though the insurer has taken
the defence that there is a breach of conditions of the policy excluding from
liability, from the driver is not duly licenced in driving the crime vehicle
when met with accident, third party has a statutory right under Section 149
read with 168 of the Act to recover compensation from insurer and it was for the
insurer to proceed against the insured for recovery of amount paid to third
party in case there was any fundamental breach of condition of Insurance
policy.
13.
As per the above propositions of law coming to the factual matrix there is
nothing even from the facts to say there is no conscious knowledge of the
alleged breach to attribute to the owner to avoid the total liability by the
Insurer despite section 168 of the Act speaks once there is insurance coverage
the insurer is bound to indemnify the insured on third party. Having regard to
the above there is nothing to interfere with the said finding of the Tribunal
so far as the liability of pay and recover is concerned, but as per the Apex
Court expressions to safeguard the interest of the Insurer to pay and
recover. Accordingly, point No.1 is
answered.
Point No.2:
14.
In the result, these three appeals are disposed of while upholding pay and
recover liability of the Insurer for the quantum arrived with the liability of
the insurer and insured (respondent Nos.1 and 2) to pay by the
insurer-appellant and then to recover. The respondents shall deposit said
amount within one month, failing which the claimants can execute and recover.
It is made clear from the settled expressions of the Apex Court in Oriental Insurance Company Limited Vs. Nanjappan[28],United Insurance Co. Ltd Vs. Lehru[29], while disposing the amount payable, if not deposited or paid any
amount so far to deposit the balance, to approach the Tribunal to direct the
RTA concerned not to register any transfer of the crime vehicle and to seek for
attachment of the crime vehicle or other property of the insured as an
assurance for execution and recovery in the same proceedings or under revenue
recovery as per the MV Act, 1988 and
also ask the Tribunal not to disburse the deposited amount to claimants (but
for to invest in a bank) till such attachment order is made. However, after the same, the Tribunal shall
not withhold the amount of the claimants, if there is any necessity to permit
for any withdrawal but for to invest the balance in fixed deposit in a
nationalized bank. Rest of the terms of the award of the Tribunal holds good. There is no order as to costs.
15.
Consequently, miscellaneous petitions, if any, pending in these appeals shall
stand closed.
_______________________
Dr. B. SIVA SANKARA RAO, J
Date:
24.02.2012
VVR
