United
India Insurance Co. Ltd. Vs. Shri Gian Chand & Ors [1997] INSC 697 (2
September 1997)
S. B.
MAJMUDAR, B. N. KIRPAL
ACT:
HEADNOTE:
S.B.
MAJMUDAR, J.
Leave
granted.
At the
SLP stage itself by order dated 25th March 1997, this Court had directed as under:
"Delay
condoned. Issue Notice for final disposal of the SLP in the light of decision
of this court Mandar Madhav Tambe & Ors. (1996) 2 SCC 328. Notice on
application for stay wherein there shall be ad- interim stay of the order of
the High Court as against the petitioner, Insurance Co. only, till further
orders".
Pursuant
to the notice for final disposal issued in the SLP. respondent Nos. 1 and 9 who
are duly served, have not thought it fit to appear and contest these
proceedings. The contest now, therefore, survives between the appellant -
Insurance company on the one hand and the claimants who are represented by
learned counsel Mr. H. Puri. Having heard learned counsel for contesting
parties, we are disposing of this appeal finally by this judgment.
A few
facts leading to this appeal may be stated at the outset, A car which was
insured by respondent No.9 - original owner, with the appellant - Insurance
Company against third party risk, met with an accident on 1st January, 1988, at about 10.30. a.m. In the said
accident, the deceased, who was going on a scooter, got fatally injured. The
contesting respondents are the claimants, being dependants of deceased. They
filed a claim for compensation before the Motor Accident Claims Tribunal II, Una,
in the State of Himachal
Pradesh. The
contention of the respondents-claimants was that the vehicle was driven by the
driver, respondent No.1 herein, in a rash and negligent manner and because of
such driving the fatal accident occurred to their bread winner. The defence of
the owner of the vehicle, viz., respondent No.9 was that he had already sold
and handed over this vehicle to respondent No.1 and therefore, he had nothing
to do with this claim. Respondent No.1. on the other hand, submitted before the
Tribunal by filing his written statement and also by entering into witness box,
that he had nothing to do with the vehicle. He neither purchased it nor had he
driven the same. However, he stated that he had no licence to drive the vehicle
at the relevant time when the accident occurred. So far as respondent No. 9,
who is the insured, was concerned, he did not think it fit to enter the witness
box. The defence of the appellant - Insurance Company was that whatever may be
the liability of respondent Nos. 1 and 9 regarding the claim for compensation,
so far as the appellant - Insurance Company is concerned, it stood exonerated
by the exclusion clause in the Insurance Policy which did not permit the
insured to hand over the vehicle for purpose of driving to an unlicensed driver.
The Tribunal after recording avidence came to the conclusion that the accident
was caused due to rash and negligent driving f the car by respondent No.1. who
was on the wheel at the relevant time. It did not believe the case of
respondent No.9 that he had sold and handed over the vehicle to respondent No.1
and had nothing to do with the vehicle. This finding was reached especially in
view of the act that respondent No.9 did not think it fit to come to the
witness box to support his case. Consequently the claim for compensation was
computed and was made payable by respondent Nos. 1 and 9. However, so far as
the Insurance Company was concerned, the Tribunal took the view that the
appellant - Insurance Company got exonerated from its liability on account of
the fact that respondent No.9. the insured, had permitted the vehicle to be
driven by an unlicensed driver, viz., respondent No.1 and therefore, he had
committed breach of the relevant term of the Policy and that entitled the
Insurance Company to get the benefit of the exclusion clause available as a defence
to the Company under Section 96 (2) (b) of the Motor Vehicles Act, 1939.
In the
result, the Tribunal while awarding Rs. 58, 400/- as compensation, in favour of
the respondents - claimants, against respondent No.1 and the present respondent
No.9. who was respondent No.2 before the Tribunal, exonerated the appellant -
Insurance Company from its liability to meet the claim amount awarded in favour
of the claimants.
That
resulted into an appeal before the High Court by respondent No.1 the driver of
the vehicle. In that appeal it was contended by him, amongst others, that the
Insurance Company should have been made liable to meet the claim and was
wrongly exonerated by the Tribunal. That contention of respondent No.1 was
accepted by the High Court in appeal, though on other contention on merits the
appeal was held to be liable to be dismissed. It was only partly allowed to the
extent that the appellant - Insurance Company was held liable jointly and
severally to pay along with the insured and the driver the amount of
compensation to the claimants.
For
coming to the said conclusion against the appellant - Insurance Company, the
High Court placed strong reliance on a decision of a Bench of two learned
judges of this Court in Ors. (1987 (2) SCC 654.
The
aforesaid decision of the High Court is on the anvil of scrutiny before us in
the present appeal.
In
support of the appeal, learned counsel for the appellant - Insurance Company
submitted that the High Court had committed a patent error of law in passing
the impugned order against the Insurance Company. For his submission he placed
reliance on two decisions of this Court in New India SCC 328 as well as on an
earlier decision of this Court in Ors. 1989 (4) SCC 128, while Mr. Puri,
learned counsel appearing for the contesting respondents - claimants pitched
his faith strongly on the earlier decision of this Court in 1987 (2) SCC supra
as well as a latter decision of a Bench P Sosh Reddy & Ors 1996 (5) SCC 21.
In
order to resolve this controversy between the parties, it must be observed at
the outset that the aforesaid decisions clearly indicate two distinct lines of
cases. The first line of cases consists of fact situations wherein the insured
are alleged to have committed breach of the condition of Insurance Policy,
which required them not to permit the vehicle to be driven by an unlicensed
driver.
Such a
breach is held to be a valid defence for the Insurance Company to get
exonerated from meeting the claims of third parties who suffer on account of
vehicular accidents which may injure them personally or which may injure them
personally or which may deprive them of their bread winner on account of such
accidents caused by the insured vehicles. The other line of cases deals with
the insured owners of offending motor vehicles that cause such accidents
wherein the insured owners of the vehicles do not themselves commit breach of
any such condition and hand over the vehicles for driving to licensed drivers
who on their own and without permission, express or implied, of the insured,
hand over vehicles or act in such a way that the vehicles get available to
unlicensed drivers for being driven by the latter and which get involved in
vehicular accidents by the driving of such unlicensed drives. In such cases the
insurance company cannot get benefit of the exclusionary clause and will remain
liable to meet the claims of third parties for accidental injuries whether
fatal or otherwise. The decisions of this Court in Skandia Insurance Co.
(supra) and in Sohan Lal Passi (supra) represent this second line of cases
while the decisions of this Court in New India Assurance Co. (supra) and in Kashiram
Yadav (supra) represent the first line of cases Chandravandan & Ors. (1987
(2) SCC 654 (supra), a Bench of two learned Judges of this Court speaking
through Thakkar, J. held that when the insured had handed over vehicle to be
driven by licensed driver and even if the licensed driver on his own and
because of his negligence had allowed an unlicensed Cleaner to drive the
vehicle it could not be said that there was any breach committed by the
insured, so as to attract the exclusion clause in favour of the Insurance
company as contemplated under Section 96 (2) (b) of the Motor Vehicles Act,
1939. In paragraph 14 of the Report it was observed that:
"The
word 'breach' in the expression "breach of a specified condition of the
policy' in Section 96(2) (b) is of great significance. 'Breach' means
infringement or violation of a promise or obligation'. This induces an
inference that the violation or infringement on the part of the promisor must
be willful infringement or violation, sub- clause (ii) of clause (b) of Section
96(2) enjoins the insurer to establish that the breach was on the part of the
insured and that it was the insured who was guilty of violating the promise or
infringement of the contract. It is only when the insured himself places the
vehicle in charge of a person who does not hold a driving licence, that it can
be said that he is 'guilty' of the breach of the promise that the vehicle will
be driven by a licensed driver. The insurer cannot escape from the obligation
to identify the insured when some mishap occurs by some mischance. When the
insured has done everything within his power inasmuch as he has engaged a
licensed driver and has placed the vehicle in charge of the licensed driver,
with the express or implied mandate to drive himself, it cannot be said that
the insured is guilty of any breach. In a way the question is as to whether the
promise made by the insured is an absolute promise or whether he is exculpated
on the basis of some legal doctrine".
We
fail to appreciate h the aforesaid decision can be of any avail to learned
counsel for the respondents - claimants on the peculiar facts of the present
case. it has been clearly held by the Tribunal as well as by the High Court
that respondent No.1 who was permitted to drive the vehicle by respondent No.9,
the insured, was admittedly not having any driving licence. It was not the case
of respondent No.9, the insured, that he did not know that respondent No.1 whom
the vehicle was being handed over was not having a valid licence. In fact, once
he did not step in the witness box to prove his case, an adverse inference had
necessarily to be drawn against him to the effect that the vehicle had been
handed over by him for being driven by an unlicensed driver, respondent No.1
That finding reached by the Tribunal as well as by the High Court must result
in exonerating the Insurance Company of its obligation as the statutory defence
became available to it. The High Court, even though agreeing with the finding
of fact reached by the Tribunal, has in our view, by misconstruing the ratio of
the Kokilaben Chandravadan & ors. (1987 (2) SCC 654. (supra), erroneously
held that the said defence was not available to the Insurance Company on the
facts of the present case.
Even
that apart, a, Bench of three learned Judges of this Court in 1996 (5) SCC 21
(supra) while upholding the ratio of the decision of this Court in Skandia
Insurance Co.
(supra)
has also taken the same view.
Even
apart from these Judgments, which do not improve the case of the respondents,
strong reliance was placed on two other judgments of this Court by the learned
counsel for the appellant. As noted earlier they represent the first General
Insurance Co. & Ors. (1989 (4) SCC 128) a bench of two learned Judges of
this Court, speaking through Jagannatha Shetty, J. distinguished the decision
in Skandia (2) SCC 654 (supra) and took the view that when the insured had
handed over the vehicle to an unlicensed driver, the Insurance Company would
get exonerated and the ratio of the Chandravadan & Ors. (1987 (2) SCC 654
(supra), would be of no assistance to the claimants in such a case. The
situation in the present case is almost parallel to the situation which was
examined by this Court in Kashi Ra, (4) SCC 128 (supra). There is also a letter
decision of Tambe & Ors. 1996 (2) SCC 328, wherein a Bench of two leaned
Judges of this Court to which one of us. B.N. Kirpal J. was a party, examined a
similar fact situation and came to the conclusion that "the exclusion
clause in the Insurance Policy makes it clear that the Insurance Company, in
the event of an accident, would be liable only if the vehicle was being driven
by a person holding a valid driving licence or a permanent driving licence
"other than a learner's licence". The use of the words
"permanent driving licence" in the insurance policy was to emphasise
that a temporary or a learner's licence-holder would not be covered by the
insurance policy." Under the circumstances when the insured had handed
over the vehicle for being driven by an unlicenced driver, the Insurance
Company would get exonerated from its liability to meet the claims of third
party who might have suffered on account of vehicular accident caused by such
unlicensed driver. In view of the aforesaid two sets of decisions of this
Court, which deal with different fact situations, it cannot be said that the
decisions rendered by this Court in Skandia Insurance Co. Ltd. Kokilaben Chandravadan
& Ors. (1987 (2) SCC 54 (supra) and the decision of the Bench of 3 learned
judges in 1996 (5) SCC 21 (supra) in any way conflict with the decisions
rendered by this Court in the cases of New India Assurance Company Ltd.
Co. & Anr. 1989 (4) SCC 128.
In the
result, therefore, this appeal is allowed. The decision of the High Court under
appeal to the extent it refused to exonerate the Insurance Company will stand
set aside and it is held that the appellant - Insurance Company is not liable
to meet the claim of the respondent claimants.
The
claim petition will stand rejected against appellant - Insurance Company. The
respondent - claimants will however be entitled to recover the awarded amount
of compensation from respondent Nos. 1 and 9.
As
there was already a stay in favour of the appellant pending these proceedings
and consequently claimants have not been paid any amount by the appellant, no
further question arises in so far as the claim of the Insurance Company in the
present appeal is concerned.
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