National Insurance Co. Ltd. vs Mohd. Ishaq and Others

Y.P. Nargotra, J.—Motor Accident Claims Tribunal, Kargil on the petition u/s 166 of M.V. Act of the claimants-respondents No. 1 & 9

has awarded compensation by his judgment dated 28.8.2001 in favour of the claimants and against the respondents No. 10 & 11 owner and

driver and directed its payment by the appellant Insurance company.

The appellant company pleaded before the Tribunal that driver of the offending vehicle was not holding a valid licence. On the said pleadings

Tribunal framed issue No. 2 in the following terms:

2 Whether the driver was holding a valid Driving licence and the vehicle was being plied as per the terms and conditions of Route permission and

was holding a valid Registration certificate. ......... OP claimants

The onus of proving the issue No. 2 was thus placed on the claimants despite the fact that the appellant-company had alleged that the driver was

not holding a valid licence. Ld Tribunal decided issue No. 2 as follows:

Issue No. 2 : In a claim case responsibility to prove that driver was not holding a valid Driving licence or that other terms and conditions of the

policy of the insurance have been violated is always upon the insurer. Here onus to prove issue No. 2 has been placed upon the claimants.

However insurer is not absolved of his responsibility to prove the violation. No evidence has been led by insurer and as a result no violation is

approved. Issue No. 2 is decided accordingly"".

The insurance company has come up in appeal against the judgment of Tribunal on two counts:

(a) The quantum of compensation has not been properly assessed in favour of the complainants.

(b) The finding on issue No. 2 is perverse. Though onus of proof had been wrongly placed and as such there was no occasion for the appellant to

prove that the driver was not holding a valid licence when claimants had not proved the issue yet the Tribunal has held that insurer has failed to

prove that the driver was not holding a valid licence.

I have heard the Ld. counsel for the appellant and Ld. counsel for the respondents 1 to 9. Other respondents No. 10 and 11 who are owner

and driver have not chosen to appear to contest the appeal.

Ld. counsel for the appellant has argued that as the owner the insured has not filed an appeal to contest the award to merits as such the insurer is

entitled to contest the same on merits. This question came up for consideration before the Hon'ble Supreme Court in case reported in National

Insurance Co. Ltd., Chandigarh Vs. Nicolletta Rohtagi and Others, Their Lordship answered as follows:

Sub-section (7) of Section 149 of 1988 Act clearly indicates in what manner Sub-section (2) of Section 149 has to be interpreted. Sub-

section (7) of Section 149 provides that no insurer to whom the notice referred to in Sub-section (2) or Sub-section (3) has been given shall be

entitled to avoid his liability to any person entitled to the benefit of any such judgment or award as is referred to in Sub-section (1) or in such

judgment as is referred to in Sub-section (3) otherwise than in the manner provided for in Sub-section (2) or in the corresponding law of the

reciprocating country, as the case may be. The expression 'manner' employed in Sub-section (7) of Section 149 is very relevant which means an

insurer can avoid its liability only in accordance with what has been provided for in Sub-section (2) of Section 149. It therefore, shows that the

insurer can avoid its liability only on the statutory defences expressly provided in Sub-section (2) of Section 149 of 1988 Act, We are, therefore,

of the view that an insurer cannot avoid its liability on any other grounds except those mentioned in Sub-section (2) of Section 149 of 1988 Act.

It is relevant to note that the Parliament, while enacting subsection (2) of Section 149 only specified some the defences which are based on

conditions of the policy and, therefore, any other breach of conditions of the policy by the insured which does not find place in Sub-section (2) of

Section 149 cannot be taken as a defence by the insurer. If the Parliament had intended to include the breach of other conditions of the policy as a

defence, it could have easily provided any breach of conditions of insurance policy in Sub-section (2) of Section 149. If we permit the insurer to

take any other defence other than those specified in Sub-section (2) of Section 149, it would mean we are adding more defences to insurer in the

statute which is neither found in the Act nor was intended to be included.

In New India Assurance Co., Shimla Vs. Kamla and Others etc. etc., also the Apex Court has held:

The position can be summed up thus: The insurer and insured are bound by the conditions enumerated in the policy and the insurer is not liable

to the insured if there is violation of any policy condition. But the insurer who is made statutorily liable to pay compensation to third parties on

account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any

breach of policy conditions on account of the Vehicle being driven without a valid licence. Ld. counsel for the insured contended that it is enough if

he establishes that he made all due enquiries and believed bona fide that the driver employed by him had a valid driving licence, in which case there

was no breach of the policy condition. As we have not decided on that contention it is open to the insured to raise it before the Claims Tribunal. In

the present case, if the insurance company succeeds in establishing that there was breach of the policy condition, the claims tribunal shall direct the

insured to pay that amount to the insurer. In default the insurer shall be allowed to recover that amount (which the insurer is directed to pay to the

claimants-thirds parties) from the insured person.

We may point out that as per the order passed by this Court on 6.3.2000, the appellant insurance company was directed to pay the award

amount to the claimants. We are told that the amount was paid by the appellant to the claimants. Now the Claims Tribunal has to decide the next

question whether the insurance company is entitled to recover that amount from the owner of the vehicle on account of the vehicle being driven by

a person who had no valid licence to drive the vehicle. For the purpose we remit the case to the Claims Tribunal. An opportunity shall be afforded

to the parties concerned for adducing evidence in that regard. We make it clear that the claimants shall not be bothered during the remaining part of

the proceedings.

The appellant relied on the case reported in AIR 2003 SC 406. This authority has no application on legal pre-position in issue in the present

case.

Thus being the law the appellant as found not entitled to maintain the appeal on the question of quantum of compensation.

It was next contended by the Ld. counsel for the appellant that issue has not been properly framed and finding of the tribunal on issue No. 2 has

led to the failure of justice and has jeopardised the right of the appellant company to recover the amount of compensation, which it has to pay to

the claimants, from the owner to which appellant becomes entitled by proving that by allowing the vehicle being driven by a person who was not

holding a valid licence, the insured has violated the conditions of insurance policy.

There is sufficient force in the contention of the appellant in this behalf. The appellant company had asserted that the driver of the offending

vehicle was not holding a valid licence therefore issue should have been in accord with such assertion and the onus of proof should have been kept

on the company and had it been so kept the insurance company could have led the evidence to establish that the driver of the offending vehicle was

not having valid Driving Licence which violated the terms and conditions of policy entitling the appellant for claiming the amount of compensation

paid by it to the claimants, from the owner.

In this view of the matter the appeal of the appellant so as it pertains to the challenging of award giving compensation to the claimants 1 to 9 is

dismissed. The appellant shall pay the awarded amount to the claimants as per the direction of the Ld. Tribunal. The appeal however as against the

finding returned on issue No. 2 is allowed and that finding is set aside. Consequently the issue No. 2 is reframed as follows:

Whether the driver of the vehicle was not holding a valid driving licence at the time of accident if so whether it violates the terms and conditions

of insurance policy and entitles the insurer to recover the amount of award from the owner insured. OPR 1

and the case is remitted back to the Tribunal. An opportunity shall be afforded to the parties concerned for adducing evidence on the aforesaid

issue. The claimants shall not be necessary parties during the proceedings for deciding the said issue. The tribunal shall summon the appellant and

owner and driver before proceedings in the matter. The appeal is thus partly allowed and partly dismissed.