National Insurance Company Limited vs Chandra Gandhi, S. Albert and Guruswamy

S. Vimala, J.—The appeal has been filed by the insurance company challenging the liability to pay the compensation on the ground that the driver did not have a driving licence to drive the vehicle at the time of accident. The deceased, Kannammal, aged 50 years, a coolie, earning a sum of Rs. 4,500/- per month, died in an accident that took place on 21.05.2002. The married daughter, Chandra Ganthi, filed the claim petition claiming compensation of Rs. 5 lakhs, in respect of the death of her mother, Kannammal. The Tribunal quantified the compensation at Rs. 1,50,000/- and directed the owner and the insurer to pay the amount jointly and severally. The details of break-up of compensation are as hereunder:

Heads

Amount (Rs. )

Loss of life and support

10,000/-

Funeral expenses

8,000/-

Loss of dependancy

1,32,000/-

Total

1,50,000/-

While fixing the loss of dependancy, the monthly income was fixed at Rs. 1,500/-. Quantifying the annual income at Rs. 18,000/- and deducting one-third towards personal expenses of the deceased and adopting the multiplier of 11, quantification for loss of dependency has been calculated and arrived at Rs. 1,32,000/-.

So far as the liability of the insurance company is concerned, the Tribunal has discussed the implications of the judgment of the criminal Court. The driver, the second respondent herein, has admitted that he has no driving licence and has paid the fine amount (copy of the judgment filed as Ex.A-5). The driver was chargesheeted for the offence u/s 3 read with 181 of the Motor Vehicles Act.

Even though the coverage of the vehicle by a valid policy of insurance has been admitted, violation of terms and conditions of the policy is pleaded and on that ground, the insurance company seeks exoneration from the liability. The Tribunal has also given a finding that the insurance company has discharged its burden of proof by proving that the driver did not have a valid driving licence, by examining the concerned officials from the Regional Transport office. Therefore, as the burden on the part of the insurance company has been discharged, in showing that driver did not have a valid driving licence, the burden is shifted on the part of the first respondent/claimant to prove that the driver did have a valid driving licence, if any.

Considering the fact that the owner did not produce the driving licence and also having regard to the fact that he has admitted the charge regarding "no licence" before the criminal Court, the Tribunal has given a right of recovery (of compensation) to the insurance company from the owner.

The learned counsel for the appellant/insurance company contended that having given a finding that the insurance company has discharged its burden of proof regarding driving licence, the Tribunal ought not to have fixed the liability on the part of the insurance company.

6.1. On the other hand, the learned counsel for the claimant contended that even assuming that the owner did not have a valid driving licence, violation of terms and conditions of the policy will not bind the claimant, who is a third party and rightly the Tribunal has given the right of recovery of the amount by the insurance company from the owner. On this ground, it is contended that the interest of the insurance company has been sufficiently safeguarded.

The decision of the Supreme Court reported in S. Iyyapan Vs. United India Insurance Company Ltd. and Another, speaks about the compulsory insurance provision, so far as third parties are concerned. The relevant observation is as hereunder:

(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third-party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.

7.1. The learned counsel for the claimant also invited the attention of the Court to the decision of the Supreme Court rendered on 9 May, 2011 in the case of Jawahar Singh vs Bala Jain & Ors., in which where the minor was the tortfeasor with no possibility of obtaining driving licence, the insurance company was directed to pay the compensation and to recover the same from the owner.

7.2. The learned counsel for the claimant also relies upon the unreported decision of this Court in C.M.A. No. 430 of 2010, decided on 05.07.2013 (Iffco Tokyio General Insurance Co. Ltd. vs. G. Rajasekaran and Others), wherein it has been held that even though the insurance company can avoid its liability by proving that there is breach of terms and conditions of the policy, still so far as third parties are concerned, the insurance company shall pay the compensation as per the certificate of insurance issued, but with liberty to recover the amount paid from the insured on the ground that violation has been proved. These decisions apply to the facts of this case.

Considering the legal position stated above, the order passed by the Tribunal granting relief to the insurance company by giving liberty to recover the amount from the owner of the vehicle is justified. Therefore, the appeal filed by the insurance company is dismissed. It is submitted that the insurance company has already deposited a sum of Rs. 1,25,000/- together with interest and costs. The insurance company shall deposit the balance amount with proportionate interest at 7.5% p.a. from the date of petition till the date of deposit, within a period of six (6) weeks from the date of receipt of a copy of the judgment. On such deposit, the claimant is entitled to withdraw the same. Needless to say that insurance company is at liberty to recover the entire award amount from the owner, i.e. the second respondent herein. No costs.