NEW INDIA ASSURANCE COMPANY LIMITED vs CHANDIGARH TRAVELS

THIS appeal has been directed by the New India Assurance Company against order dated 2.2.2006 passed by Consumer Disputes Redressal Forum-I, U.T. Chandigarh (hereinafter to be referred as District Consumer Forum), whereby the complaint of M/s. Chandigarh Travels (complainant) was accepted and the appellant was directed to pay a sum of Rs. 80257 with interest @ 6% p.a. from 2.1.2002 till the date of payment. Rs. 1500 were awarded as costs.

BRIEFLY stated the facts are that M/s. Chandigarh Travels -complainant (respondent in appeal) is the owner of bus bearing registration No. CH-01-U-2664. The said vehicle was insured with New India Assurance Co. (appellant) vide insurance policy No. 31/11576 which was valid with effect from 5.8.2000 to 4.8.2001. The said bus met with an accident on the night intervening 2/3.6.2001 at about 2.00 a.m. The bus was damaged. An intimation was sent to the appellant and it appointed Sq. Ldr. N.S. Bajaj as Surveyor-cum-loss assessor, who assessed damage to the bus vide report Annexure R-2 dated 8.6.2001, after surveying the spot on 3.6.2001 at about 9.00 a.m. He assessed the loss to the tune of Rs. 80257. It was next averred that the appellant repudiated the claim of the respondent on the plea that the driver of bus namely Gurjit Singh who was said to be holding driving licence for HTV and heavy passenger vehicle for the period 28.3.1999 to 13.7.2002 issued by Licensing Authority, Guwahati was in fact having a fake licence.

It was further averred that repudiation of the claim by the appellant was baseless as the licence had been renewed many a time by Licensing Authority, Ropar and owner of the bus and seen the licence before employing him and was satisfied that the same was genuine.

ALLEGING deficiency in service on the part of appellant, the complaint was filed and claimed an amount of Rs. 80,257 with interest @ 24% p.a. from the date of accident till its payment besides costs of litigation. The appellant through its Divisional Manager as well as Branch Manager filed written reply and admitted the case regarding the insurance of the vehicle and occurrence of accident. It also admitted that the loss was assessed at Rs. 80,257 but asserted that the claim was repudiated as during the investigation, it was found that the driving licence of Gurjit Singh bearing No. 76424/85 was fake and as such there was no deficiency in service on its part. Consequently, it was prayed that the complaint be dismissed.

THE complaint was allowed by District Consumer Forum vide order dated 17.5.2004, against which an appeal was filed by the Insurance Company to the State Commission. THE State Commission vide order dated 15.10.2004 allowed the appeal and set aside the order of District Consumer Forum and remanded the case of District Forum for afresh decision, after permitting the Assurance Company to lead evidence of the concerned District Transport Office, Guwahati to prove that Gurjit Singh, driver was not having valid driving licence. After remand of the case by the State Commission, Mr. Rajeev Duggal, Advocate was appointed as Local Commissioner to examine the official/officer of DTO, W/Z, Kamrup, Guwahati with regard to licence No. 76424/85 in the name of Gurjit Singh valid upto 13.7.2002, vide order dated 31.3.2005. He submitted his report on 16.5.2005. The appellant filed additional affidavit of Mr. B.S. Khosla, Senior Divisional Manager on 31.5.2005. After hearing Counsel for the parties, District Consumer Forum vide order dated 2.2.2006 allowed the complaint with costs as stated in the earlier part of the judgment.

AGGRIEVED by the said order, New India Assurance Company has filed the present appeal.

WE have heard Counsel for appellant Mr. Jitin Talwar, Counsel for respondent Mr. Harbans Singh Chawla, and carefully gone through the file. It is an admitted fact that bus bearing No. CH-01-U-2664 was insured with the appellant vide Policy No. 31/11576 which was valid with effect from 5.8.2000 to 4.8.2001. The accident with the bus took place on the night intervening 2/3.6.2001 at about 2.00 a.m. in the night and the bus was damaged. The Surveyor was appointed, who assessed the loss to the bus of Rs. 80,257. Thus, it is an admitted fact that at the time of accident, the insurance policy was valid. The claim of respondent (complainant) has been repudiated by the appellant on the ground that the original driving licence of Gurjit Singh, driver bearing No. 76424/85 which was issued by the Licensing Authority, Guwahati was fake and its subsequent renewal by Licensing Authority, Ropar does not make it a valid driving licence. In this case, Mr. Rajeev Duggal, Advocate was appointed as Local Commissioner who submitted his report dated 16.5.2005-Annexure C/A. Before submitting his report, he visited the office of DTO, W/Z, Kamrup on 12.4.2005 at 10.00 a.m. in the presence of Mr. Raj Kumar Bashamboo, Advocate of the New India Assurance Company and recorded the statement of Mr. Rajni Athpariaa, LDA, Office of DTO, R & L, W/Z, Kamrup, Guwahati which is Annexure LC-4. According to the statement, the licence in question bearing No. 76424/85 in the name of Gurjit Singh for HTV/HPV was never issued by his office and there is no record of the said licence as it was never issued by his office. There is no dispute about it that the said licence had been renewed from the Licensing Authority, Ropar, several times.

Counsel for respondent (complainant) contended that the original driving licence was alleged to be issued in 1985 and thereafter it was renewed from time-to-time, several times and the respondent bona fide believed that the driver employed by him had a valid driving licence and he was having experience of driving heavy transport vehicles since, 1985 and as such there was no breach of terms and conditions of the policy.

COUNSEL for appellant contended that renewal of forged driving licence does not make the licence to be valid which was originally fake licence. He further contended that the owner was required to make inquiry from the concerned Licensing Authority whether the licence shown to him was valid or not. For this contention, he has placed reliance upon an authority of Punjab State Commission titled United India Insurance Company Ltd. v. Manjit Singh, Appeal No. 1079 of 2000 decided on 21.3.2005, in which it was observed that it was incumbent upon the part of insured to satisfy himself of genuineness of driving licence of the driver before he is employed and ignorance on his part about the driver''s fake licence cannot be a ground for allowing insurance claim. On the other hand, learned Counsel for complainant referred to a judgment of Hon''ble National Commission in National Insurance Co. Ltd. v. Sant Kumar Goyal, I (2005) CPJ 79 (NC), wherein the National Commission relying upon the judgment of Apex Court in the case of United India Insurance Co. v. Lehru and Others, II (2003) SLT 516=I (2003) ACC 611 (SC), dismissed revision petition of the Insurance Company involving the same issue. The Hon''ble Supreme Court in Lehru''s case (supra) observed as under: "When an owner is hiring a driver he will, therefore, have to check whether the driver has a driving licence. If the driver produces a driving licence which on the face of it looks genuine, the owner is not expected to find out whether the licence has in fact been issued by a competent authority or not. The owner would then take the test of the driver. If he finds that the driver is competent to drive the vehicle, he will hire the driver. We find it rather strange that Insurance Companies expect owners to make inquiries with RTOs which are spread all over the country, whether the driving licence shown to them is valid or not. Thus, where the owner has satisfied himself that the driver has a licence and is driving competently there would be no breach of Section 149(2)(a)(ii). The Insurance Company would not then be absolved of liability. If it ultimately turns out that the licence was fake the Insurance Company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive. More importantly even in such a case the Insurance Company would remain liable to the innocent third party, but it may be able to recover from the insured. This is the law which has been laid down in Skanadia''s, Sohan Lal Passi''s and Kamla''s case. We are in full agreement with the views expressed therein and seen no reason to take a different view."

HE has also referred to another authority of National Commission titled New India Assurance Co. Ltd. v. Kishan Bhai, I (2005) CPJ 81 (NC), wherein by referring to the judgment of Apex Court in Lehru''s case (supra) and National Insurance Co. Ltd. v. Swaran Singh and Others, I (2004) SLT 345=I (2004) ACC 1 (SC), the National Commission observed as under: "For the foregoing reasons, we are of the definite view that putting onus on the insurer to prove negligence on the part of the insurer is improper stride. We feel that if the owner prima facie satisfied himself by seeing the licence and the way driver drives that may be sufficient excepting in a circumstance where the driver is ineligible to the knowledge of the owner, or where he did not have any licence or where the licence had expired. It may be mentioned that the observations of the Supreme Court are applicable in both types of matters/claims by the insured and claims by third parties."

The Hon''ble Apex Court in Swaran Singh''s case (supra), observed as under: "(iii) The breach of policy condition e.g., disqualification of driver or invalid driving licence of the driver, as contained in Sub-section (2)(a)(ii) of Section 149, have to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the conditions of the policy regarding use of vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time.

(iv) The Insurance Companies are, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish ''breach'' on the part of the owner of the vehicle; the burden of proof wherefor would be on them.

(v) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insured would not be allowed to avoid its liability towards insured unless the said breach or breaches on the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply "the rule of main purpose" and the concept of "fundamental breach" to allow defence available to the insured under Section 149(2) of the Act.

Sh. Manjinder Singh, owner of the bus had sworn affidavit dated 8.4.2003 in which he stated that the driving licence of Gurjit Singh was renewed many a time by Licensing Authority, Ropar, so, he bona fide believed that it was a genuine licence and, thus, he had taken due care and caution in employing the driver. He further stated that the traffic police had checked driving licence of Gurjit Singh many a time and it was found in order in his presence and in the presence of other partners.

IT has been observed in sub-para (iii) of Para 105 of Swaran Singh''s case by the Hon''ble Apex Court that mere fake or invalid driving licence or disqualification of the driver for driving at the relevant time is not in itself defence available to the insurer towards insured or the third parties. To avoid its liability towards insured, the insurer has to prove that the insured was guilty of negligence or failed to exercise reasonable care in the matter of fulfilling conditions of the policy regarding use of vehicle by duly licensed driver or one who was not disqualified to drive at the relevant time. There is no evidence on file that Gurjit Singh was ever disqualified to drive the vehicle.

THUS, in view of the discussion above, we hold that the appellant is bound to pay Rs. 80,257 along with interest @ 6% p.a. from 2.1.2002, the date of repudiation till its payment, besides costs of complaint. Consequently, appeal is dismissed with costs of Rs. 1,000. Copies of the order be communicated to the parties, free of charge. Appeal dismissed. -----------------