NEW INDIA ASSURANCE CO LTD vs Bijayananda Mohanty

THE complainant/respondent, owned a bus bearing registration No.OR -13 -4797 which he had got insured with the petitioner insurance company for the period from 13 -03 -1999 to 12 -03 -2000 for the insured amount of Rs.8,00,000/ -. The aforesaid vehicle, while being driven by one Surendra Nayak from Puri to Cuttack, met with an accident and got severely damaged. The surveyor appointed by the insurance company inspected the vehicle which the complainant claimed to have later got repaired at a cost of Rs.3,20,000/ -. The claim submitted by the complainant, however, was rejected by the insurance company on the ground that the driver of the vehicle did not possess a valid driving license, at the time the vehicle met with the accident. Being aggrieved from the rejection of the claim the complainant approached the concerned District Forum by way of a complaint seeking reimbursement of the amount spent by him on repair of the vehicle.

THE insurance company contested the complaint on the same ground on which the claim was rejected i.e. the driver did not possess a valid driving license at the time the vehicle met with the accident. It was submitted in the reply that as per the report of the RTA at Kolkata from where the driving license initially purported to have been issued to Mr. Surendra Naik, the driving license in question was actually issued to one Mr. Satyajit Sinha Ray.

VIDE its order dated 28 -02 -2006 the District Forum allowed the complaint and directed the insurance company to pay the amount of Rs.3,20,000/ - to the complainant along with interest at the rate of 9% per annum and cost of litigation quantified at Rs.500/ -. Being aggrieved from the order passed by the District Forum the insurance company approached the concerned State Commission by way of an appeal. The said appeal having been dismissed vide impugned order dated 30 -06 -2014, the insurance company is before us by way of this revision petition.

IT is not in dispute that the driving licence submitted by the complainant to the insurance company was bearing No.211536/85 Kolkata. The aforesaid license was got renewed from Regional Transport Officer, Bhubhaneswar first upto 12 -12 -2004 and then upto 28 -02 -2005.

A perusal of the report given by the Transport Authority at Kolkata would show that driving licence bearing No.211536 was issued to one Mr. Satyajit Sinha Ray son of late D.P. Sinha on 07 -11 -1985. It is, thus, obvious that the original licence bearing No.211536 was in the name of Satyajit Sinha Ray and not in the name of Surendra Nayak. Obviously Mr. Surendra Nayak obtained renewal in his name on the basis of some forged driving licence submitted to the Transport Authority at Bhubaneswar. Since the original licence No.211536/85 was never issued to Mr. Surendra Nayak its renewal by Regional Transport Officer, Bhubaneswar would be of no consequence. The inevitable inference, therefore, is that the driver of the vehicle did not possess a valid driving licence at the time the vehicle met with an accident.

IN National Insurance Co. Ltd. Vs. Laxmi Narain Dhut, 2007 3 SCC 700, the Hon''ble Supreme Court noted as under: "24. In the background of the statutory provisions, one thing is crystal clear i.e. the statute is beneficial one qua the third party. But that benefit cannot be extended to the owner of the offending vehicle. The logic of fake licence has to be considered differently in respect of the third party and in respect of own damage claims.

The inevitable conclusion therefore is that the decision in Swaran Singh case has no application to own damage cases. The effect of fake licence has to be considered in the light of what has been stated by this Court in New India Assurance Co. V. Kamla. Once the licence is a fake one the renewal cannot take away the effect of fake licence. It was observed in Kamla case as follows: (SCC p. 347, para 12)

As a point of law we have no manner of doubt that a fake licence cannot get its forgery outfit stripped off merely on account of some officer renewing the same with or without knowing it to be forged. Section 15 of the Act only empowers any licensing authority to ''renew a driving licence issued under the provisions of this Act with effect from the date of its expiry''. No licencing authority has the power to renew a fake licence and, therefore, a renewal if at all made cannot transform a fake licence as genuine. Any counterfeit document showing that it contains a purported order of a statutory authority would ever remain counterfeit albeit the fact that other persons including some statutory authorities would have acted on the document unwittingly on the assumption that it is genuine".

As noted above, the conceptual difference between third -party right and own damage cases has to be kept in view. Initially, the burden is on the insurer to prove that the licence was a fake one. Once it is established the natural consequences have to flow.

In view of the above analysis the following situations emerge:

The decision in Swaran Singh case has no application to cases other than third -party risks.

Where originally the licence was a fake one, renewal cannot cure the inherent fatality.

In case of third -party risks the insurer has to indemnify the amount, and if so advised, to recover the same from the insured.

The concept of purposive interpretation has no application to cases relatable to Section 149 of the Act.

"In National Insurance Co. Ltd. Vs. Om Prakash Jain Civil Appeal No. 6248 of 2009 decided on 14.09.2009, the Hon''ble Supreme Court referring to its earlier decision in Laxmi Narain Dhut and Swaran Singh specifically held as under:

"In National Insurance Company Limited Vs. Laxmi Narain Dhut, 2007 3 SCC 700, it has been clearly laid down that the decision in the case of National Insurance Company Ltd. Vs. Swaran Singh and Anr., 2004 3 SCC 297 has no application to the cases other than third -party risks and where originally licence was a fake, renewal thereof cannot validate the same. In the present case, the complaint was filed for damage of the vehicle of the insured and not the third party risk. The District Forum and State Commission have concurrently held that the original licence of the driver was fake. This being the position, the District Forum was justified in dismissing the complaint and the State Commission committed an error by awarding compensation to the respondent".

In the aforesaid case, the complaint was filed by the insured himself seeking compensation for the damage caused to his vehicle, which had met with an accident. It was found that the driving license possessed by the driver of the vehicle was a fake licence. The National Commission having decided in favour of the complainant, the matter was taken by the insurance company to the Apex Court.

In United India Insurance Co. Ltd. Vs. Davinder Singh, 2007 8 SCC 698, the respondent owned a vehicle which he had got insured from the appellant United India Insurance Co. Ltd. The said vehicle met an accident with a truck. It was being driven by a person, who did not possess a valid license. The owner of the vehicle filed a complaint before the District Forum, seeking compensation for the damages caused to his vehicle. This Commission have ruled in his favour. The matter was taken to the Hon''ble Supreme Court by way of an appeal. Allowing the appeal filed by the insurance company, the Apex Court inter -alia held that the fora below had committed an error in holding the insurance company liable to indemnify the owner of the vehicle with regard to the losses sustained by him. During the course of the judgment, the Hon''ble Supreme Court, inter -alia observed as under: "10. It is, thus, axiomatic that whereas an insurance company may be held to be liable to indemnify the owner for the purpose of meeting the object and purport f the provisions of the Motor Vehicles Act, the same may not be necessary in a case where an insurance company may refuse to compensate the owner of the vehicle towards his own loss. A distinction must be borne in mind as regards the statutory liability of the insurer vis - -vis the purport and object sought to be achieved by a beneficent legislation before a forum constituted under the Motor Vehicles Act and enforcement of a contract qua contract before a Consumer Forum".

In Oriental Insurance Co. Ltd. V. Meena Variyal, 2007 5 SCC 428, the Hon''ble Supreme Court referring to its earlier decision in Swaran Singh, 2004 3 SCC 297 held as under:

"It is difficult to apply the ratio of this decision to a case not involving a third party. The whole protection provided by Chapter XI of the Act is against third -party risk. Therefore, in a case where a person is not a third party within the meaning of the Act, the insurance company cannot be made automatically liable merely by resorting to Swaran Singh ratio. This appears to be the position. This position was expounded recently by this Court in Naitonal Insurance Co. Ltd. Vs. Laxmi Narain Dhut. This Court after referring to Swaran Singh and discussing the law summed up the position thus : (Laxmi Narain Dhut case, SCC p. 719 para 38)

THE learned counsel for the complainants relies upon the decisions referred in the order of the State Commission. However, the aforesaid decision will not apply to the case before us where the insured himself is the complainant and the vehicle at the time it met with an accident was being driven by a person who did not possess a valid and genuine driving licence.

FOR the reasons stated hereinabove, we find no merit in the revision petition and the same is hereby dismissed.