National
Insurance Co. Ltd. Vs. Kusum Rai
& Ors [2006] Insc 150 (24 March
2006)
S.B. Sinha
& P.K. Balasubramanyan
(Arising
out of SLP(C) No.14306 of 2003) S.B. SINHA, J :
Leave granted.
Respondent
No. 3 herein is owner of a jeep bearing registration No.
BR 03 P 9011. The said vehicle admittedly was being
used as a taxi and, thus, a commercial vehicle. One Ram Lal
was working as a Khalasi in the said taxi. He used to
drive the said vehicle sometimes. He had a driving licence.
Driving licence, however, was granted to him for
driving a Light Motor Vehicle. The said taxi met with an accident on 14.8.2000
at about 1 p.m. as a result whereof a girl aged about 12 years, Km. Anjali Rai, died. On an
allegation made in that behalf that the said taxi was being driven rashly and
negligently by the aforementioned Ram Lal, a claim
petition in terms of Sections 163A and 166 of the Motor Vehicles Act, 1988 (for
short "the Act") was filed by the First and the Second Respondents
herein. The said taxi admittedly was insured with the Appellant herein. One of
the issues raised in the said proceeding was as to whether the driver of the
said jeep was having a valid and effective licence.
Another question which arose was as to whether the said Ram Lal
was driving the said vehicle.
The
learned Tribunal did not go into the said question. It inter alia held that the said Ram Lal
had been driving the said vehicle having regard to the fact that he had been
shown as the accused in the criminal case.
However,
as regard the question as to whether by permitting the said Ram Lal to drive the said vehicle, the Respondent No. 3 herein
violated the terms and conditions of contract of licence,
the learned Tribunal relying on or on the basis of the decision of this Court
in New India Assurance Co., Shimla v. Kamla and Others [(2001) 4 SCC 342] held that the Insurance
Company cannot get rid of its third party liability as the said question arises
only between the owner of the vehicle and the insurance company. It was further
held:
"Insurance
Company can recover this amount from owner of vehicle. This legal proposition
is fully applicable in this matter. So, Issue No. 3 is decided in favour of Petitioners." The appeal preferred thereagainst by the Appellant herein before the High Court
was dismissed on the premise that no appeal was maintainable wherefor reliance was placed by the High Court on a
decision of this Court in National Insurance Company Ltd. Chandigarh
v. Nicolletta Rohtagi and
Others [JT 2002 (7) SC 251]. As regard the purported statutory liability of the
Appellant, it was held:
"the
mere fact that there was violation of the terms and conditions subject to which
the insurance policy had been issued, cannot have the effect of exonerating the
insurer from the statutory liability cast upon him in this regard to pay the
amount to the third party victim." It was further held:
"It
will, therefore, be open to the insurer appellant to initiate an appropriate
proceeding for the refund of the amount paid by it to the claimants and
establish the breach of the terms and conditions subject to which the insurance
policy had been issued." Hence, this appeal. The
contention raised on behalf of the Appellant was that the High Court was
palpably in error as violation of the terms and conditions of the contract of
insurance is a matter which comes within the purview of any of the 'statutory defences' which can be raised by an insurer under
sub-section (2) of Section 149 of the Act. The statutory bar as regards raising
a defence on the part of the insurance company is
confined to the quantum of damages only.
The
learned counsel appearing on behalf of the Respondent conceded that the appeal
preferred by the Respondent was maintainable. However, relying on or on the
basis of a decision of this Court in Oriental Insurance Co. Ltd. v. Nanjappan and Others [2005 SCC (Cri)
148] he argued that the insurance company may pay the awarded amount to the
claimants and recover the same from the owner of the vehicle.
In a
proceeding arising out of a claim petition filed under Section 166 of the Motor
Vehicles Act, the insurance company is a necessary party as it is required to
indemnify the owner or driver of the vehicle. Even in a case where the owner
colludes with the claimants or is not otherwise represented, the insurance
company can contest the matter on merits of the claim petition upon obtaining
leave of the court as is provided under sub-section (2) of Section 170 of the
Act. However, there does not exist any embargo in
raising a defence which comes within the purview of
sub-section (2) of Section 149 of the Act which reads as under:
"149.
Duty of insurers to satisfy judgments and award against persons insured in
respect of third party risks.
-
xxx xxx xxx
-
No sum shall be payable by an
insurer under sub- section (1) in respect of any judgment or award unless,
before the commencement of the proceedings in which the judgment of award is
given the insurer had notice through the Court or, as the case may be, the
Claims Tribunal of the bringing of the proceedings, or in respect of such
judgment or award so long as execution is stayed thereon pending an appeal; and
an insurer to whom notice of the bringing of any such proceedings is so given
shall be entitled to be made a party thereto and to defend the action on any of
the following grounds, namely:
-
that
there has been a breach of a specified condition of the policy, being one of
the following conditions, namely:
-
a
condition excluding the use of the vehicle
-
for
hire or reward, where the vehicle is on the date of the contract of insurance a
vehicle not covered by a permit to ply for hire or reward, or
-
for
organised racing and speed testing, or
-
for
a purpose not allowed by the permit under which the vehicle is used, where the
vehicle is a transport vehicle, or
-
without
side-car being attached where the vehicle is a motor cycle; or
-
a
condition excluding driving by a named person or persons or by any person who
is not duly licensed, or by any person who has been disqualified for holding or
obtaining a driving licence during the period of
disqualification; or
-
a
condition excluding liability for injury caused or contributed to by conditions
of war, civil war, riot or civil commotion; or
-
that the policy is void on the ground that it was obtained by the
nondisclosure of a material fact or by a representation of fact which was false
in some material particular." It has not been disputed before us that the
vehicle was being used as a taxi. It was, therefore, a commercial vehicle. The
driver of the said vehicle, thus, was required to hold an appropriate licence therefor. Ram Lal who allegedly was driving the
said vehicle at the relevant time, as noticed hereinbefore, was holder of a licence to drive a Light Motor Vehicle only.
He did
not possess any licence to drive a commercial
vehicle. Evidently, therefore, there was a breach of condition of the contract
of insurance. The Appellant, therefore, could raise the said defence.
We
have noticed hereinbefore that the Tribunal has not gone into the said
question. It proceeded on the basis that the case was covered by Kamla (supra). The correctness of the said decision came up
for consideration before this Court in National Insurance Co. Ltd. v. Swaran Singh and Others [(2004) 3 SCC 297] wherein this
Court clearly held:
"The
owner of a motor vehicle in terms of Section 5 of the Act has a responsibility
to see that no vehicle is driven except by a person who does not satisfy the
provisions of Section 3 or 4 of the Act.
In a
case, therefore, where the driver of the vehicle, admittedly, did not hold any licence and the same was allowed consciously to be driven
by the owner of the vehicle by such person, the insurer is entitled to succeed
in its defence and avoid liability. The matter,
however, may be different where a disputed question of fact arises as to
whether the driver had a valid licence or where the
owner of the vehicle committed a breach of the terms of the contract of
insurance as also the provisions of the Act by consciously allowing any person
to drive a vehicle who did not have a valid driving licence.
In a given case, the driver of the vehicle may not have any hand in it at all
e.g. a case where an accident takes place owing to a mechanical fault or vis major. (See Jitendra
Kumar)" In Swaran Singh (supra), to which one of
us was a party, this Court noticed an earlier decision of this Court, namely, Malla Prakasarao v. Malla Janaki and Others [(2004) 3
SCC 343] wherein one of the members of the Bench, V.N. Khare,
J. (as the learned Chief Justice then was) was a member.
In that
case, it was held:
-
"It is not disputed that the driving licence of the
driver of the vehicle had expired on 20-11-1982 and the driver did not apply for
renewal within 30 days of the expiry of the said licence,
as required under Section 11 of the Motor Vehicles Act, 1939.
It is
also not disputed that the driver of the vehicle did not have driving licence when the accident took place. According to the
terms of the contract, the Insurance Company has no liability to pay any
compensation where an accident takes place by a vehicle, driven by a driver
without a driving licence. In that view of the
matter, we do not find any merit in the appeal." This Court in Swaran Singh (supra) clearly laid
down that the liability of the insurance company vis-a-vis
the owner would depend upon several factors. The owner would be liable for
payment of compensation in a case where the driver was not having a licence at all. It was the obligation on the part of the
owner to take adequate care to see that the driver had an appropriate licence to drive the vehicle. The question as regards the
liability of the owner vis-a-vis the driver being not
possessed of a valid licence was considered in Swaran Singh (supra) stating:
"Section
3 of the Act casts an obligation on a driver to hold an effective driving licence for the type of vehicle which he intends to drive.
Section 10 of the Act enables the Central Government to prescribe forms of
driving licences for various categories of vehicles
mentioned in sub-section (2) of the said section. The various types of vehicles
described for which a driver may obtain a licence for
one or more of them are:
-
motorcycle
without gear,
-
motorcycle
with gear,
-
invalid
carriage,
-
light
motor vehicle,
-
transport
vehicle,
-
road
roller, and
-
motor vehicle of other specified description.
The
definition clause in Section 2 of the Act defines various categories of
vehicles which are covered in broad types mentioned in sub-section (2) of
Section 10. They are "goods carriage", "heavy goods
vehicle", "heavy passenger motor vehicle", "invalid
carriage", "light motor vehicle", "maxi-cab",
"medium goods vehicle", "medium passenger motor vehicle",
"motor-cab", "motorcycle", "omnibus",
"private service vehicle", "semi- trailer", "tourist
vehicle", "tractor", "trailer" and "transport
vehicle". In claims for compensation for accidents, various kinds of
breaches with regard to the conditions of driving licences
arise for consideration before the Tribunal as a person possessing a driving licence for "motorcycle without gear", [sic may
be driving a vehicle] for which he has no licence.
Cases may also arise where a holder of driving licence
for "light motor vehicle" is found to be driving a
"maxi-cab", "motor-cab" or "omnibus" for which he
has no licence. In each case, on evidence led before
the Tribunal, a decision has to be taken whether the fact of the driver
possessing licence for one type of vehicle but found
driving another type of vehicle, was the main or contributory cause of
accident. If on facts, it is found that the accident was caused solely because
of some other unforeseen or intervening causes like mechanical failures and
similar other causes having no nexus with the driver not possessing requisite
type of licence, the insurer will not be allowed to
avoid its liability merely for technical breach of conditions concerning
driving licence." The matter came up for
consideration again before a Division Bench of this Court in National Insurance
Corporation Ltd. V. Kanti Devi
(Mrs.) and Others [(2005) 5 SCC 789] wherein this Court upon consideration of
the observations made in Swaran Singh (supra) opined:
-
"The decision in Swaran Singh case was not before
either MACT or the High Court when the respective orders were passed.
Therefore, we think it proper to remit the matter to MACT for fresh
consideration. It shall permit the parties to lead such further evidence as
they may intend to lead. The matter shall be decided keeping in view the
principle enunciated by this Court in Swaran Singh
case." In a case of this nature, therefore, the owner of a vehicle cannot
contend that he has no liability to verify the fact as to whether the driver of
the vehicle possessed a valid licence or not.
However, in this case the owner has not appeared. The victim was aged only 12
years. The claimants are from a poor background. They must have suffered great
mental agony. Therefore, we are of the opinion that it may not be appropriate
to push them into another round of litigation particularly when it may be
difficult for them to secure the presence of the owner of the vehicle.
In Nanjappan (supra), this Court opined:
-
"Therefore, while setting aside the judgment of the High court we direct in
terms of what has been stated in Baljit Kaur's case (supra) that the insurer shall pay the quantum
of compensation fixed by the Tribunal, about which there was no dispute raised,
to the respondents-claimants within three months from today. The for the
purpose of recovering the same from the insured, the insurer shall not be
required to file a suit. It may initiate a proceeding before the concerned
Executing Court as if the dispute between the
insurer and the owner was the subject matter of determination before the
Tribunal and the issue is decided against the owner and in favour
of the insurer. Before release of the amount to the insured, owner of the
vehicle shall be issued a notice and he shall be required to furnish security
for the entire amount which the insurer will pay to the claimants. The
offending vehicle shall be attached, as a part of the security.
If
necessity arises the Executing Court shall take assistance of the
concerned Regional Transport authority. The Executing Court shall pass appropriate orders in
accordance with law as to the manner in which the insured, owner of the vehicle
shall make payment to the insurer. In case there is any default it shall be
open to the Executing Court to direct realization by disposal
of the securities to be furnished or from any other property or properties of
the owner of the vehicle, the insured.
The appeal
is disposed of in the aforesaid terms, with no order as to costs."
Although, thus, we are of the opinion that the Appellant was not liable to pay
the claimed amount as the driver was not possessing a valid licence
and the High Court was in error in holding otherwise, we decline to interfere
with the impugned award, in the peculiar facts and circumstances of the case,
in exercise of our jurisdiction under Article 136 of the Constitution of India
but we direct that the Appellant may recover the amount from the owner in the
same manner as was directed in Nanjappan (supra).
For
the reasons aforementioned, we decline to interfere with the impugned judgment.
The appeal is dismissed accordingly.
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