P. Naguru and Another vs S. Krishnama Raju and Another

B.K. Somasekhara, J.—The claimants who are the parents of the deceased Pallamal Dorairajan who died in a motor vehicle accident on 23-7-1984 due to the rash and negligent driving of the lorry bearing No. AAC 7594 by its driver while going from Malta in village to Srikalahasti, laid a claim for recovery of Rs. 80,000/- u/s 110-A of the Motor Vehicles Act, 1939 (the Act) in M.V.O.F.No. 217 of 1987 as against the first respondent, the owner of the lorry and second respondent, the insurer. The Tribunal having held an inquiry into the controversies raised by the contesting respondents held that the accident was due to rash and negligent driving of the vehicle by the driver of the lorry, that the claimants were entitled to recover Rs. 73,000/-by way of compensation but the claim petition cannot be allowed in view of the fact that the claimants failed to prove that the driver of the lorry had been authorised by the respondent No. 1 to carry the passengers including the deceased. Aggrieved by that, the appeal is filed.

The learned Counsel for the appellants contended that the Tribunal was wrong in dismissing the claim petition on such ground when there was material to show that the driver of the vehicle was driving the vehicle in the course of the employment at the time of the accident and there was no burden cast on claimants to establish that he has been duly authorised by the first respondent to carry the passengers, whether gratuitous passengers or fare paid passengers. In support of his contention he relied upon a decision of the Supreme Court in Pushpabai Purshottam Udeshi and Others Vs. Ranjit Ginning and Pressing Co. (P) Ltd. and Another, The learned Counsel for the second respondent, the insurer has contended that in the absence of proof that the first respondent had authorised the driver to carry the passengers, there was a breach of conditions of file policy and therefore the insurer was not liable to pay the compensation.

The Tribunal has dealt with the question relating to the: liability of the respondents to pay the compensation in this case in issues 1 and 2 in para 6 of the judgment. On facts, it was found that the date of the accident was Adi Krutika day when the deceased and several persons travelled in the lorry and according to the contention of the respondents they forcibly entered into the lorry and travelled therein and met the accident. With the testimony of P.W.2, another co-passenger of the deceased and the testimony of R.W.I, the first respondent, the Tribunal has held that it was for the petitioners-claimants to show that the driver was given express permission or tacit approval regarding his conduct of collecting fare while travelling in the lorry. The testimony of R.W.I, the owner of the Lorry was more accepted than the testimony of P.W.2 in that regard. The Tribunal dealt with the theory of the claimants that the first respondent was present in the lorry to authorise the driver to carry the passengers, which they did not establish. The Tribunal depended upon several rulings as detailed therein to come to the conclusion that the respondents were not liable to pay compensation in this case under the circumstances.

On a careful consideration and proper examination of the true legal questions involved in this case, the Tribunal appears to be not right in holding as above and in dismissing the petition. It was established that the lorry was driven by a duly authorised driver at the instance of the first respondent, the owner and the accident took place in the course of the employment. It was also further established that the first respondent had no knowledge or had not authorised the driver to carry such passengers whether fare paid or non-fare paid and that the vehicle involved in the accident was insured with the second respondent, the insurer at the relevant time. The Tribunal has committed an initial error in dealing with the matter about the express or implied authority by the owner to the driver to carry the passengers or not, because the settled law is that when once the vehicle is entrusted to a driver, there is implied authority by the owner of the vehicle to drive the vehicle and to do all possible acts in connection with the using of the vehicle except to act fradulently against the interest of the owner. The question is not whether there was express or implied authority to carry the passengers. If he had carried the passengers without express or implied authority of the owner, it only means he was performing his legitimate duties in an irregular manner. That itself will not absolve the owner of the vehicle regarding the vicarious liability for the acts committed by the driver, the servant acting under his authority to drive the vehicle and to use the vehicle in all manner possible for that purpose.

The above questions were squarely covered in Pushpabai''s case (1 supra) and in Skandia Insurance Co. Ltd. Vs. Kokilaben Chandravadan and Others, . In Skandia Insurance Company Limited case2- the implication of Section 96 (1) of the Act was under consideration. The simple question involved therein was whether the driving of the vehicle by a person not duly possessing valid licence would absolve the owner of the vehicle and the insurer when it is established that the owner of the vehicle done all that was possible to place the vehicle in-charge of the duly licensed driver. The question, whether in such a situation there was a breach of the terms of the policy, was also considered. The exclusion clause in the insurance policy by way of defence was dealt with in Skandia Insurance Company Limited case (2 supra) to hold in the negative, which is as follows:

"On a true interpretation of the relevant clause which interpretation is at peace with the conscience of Section 96, the condition excluding driving by a person not duly licensed is not absolute and the promisor is absolved once it is shown that he has done everything in his power to keep, honour and fulfil the promise and he himself is not guilty of a deliberate breach.

Even if it is treated as an absolute promise, there is substantial compliance therewith upon an express or implied mandate being given to the licensed driver not to allow the vehicle to be left unattended so that it happens to be driven by an unlicensed driver.

The exclusion clause has to be ''read down'' in order that it is not at war with the ''main purpose'' of the provisions enacted for the protection of victims of accidents so mat the promisor is exculpated when he does everything in his power to keep the promise".

Such view was re-examined by the Supreme Court in Sohan Lal Passi Vs. P. Sesh Reddy and others, and the same was accepted (para 13). In-so-far as the liability of the owner in regard to the negligence of the driver who was driving the vehicle in the course of the employment is concerned, the law was set at rest in Pushpabai''s case (1 supra) and similar pronouncements by the Supreme Court. Further, the question of liability of the Insurance Company as has been dealt with and held in affirmative in Skandia Insurance Company Limited case (supra), after re-consideration, has been elaborated in Sohan Lal Passi Vs. P. Sesh Reddy and others, . A brief record of the same would be useful. The question formulated in para 12 is as follows.

"In a case where the person who has got insured the vehicle with the insurance company, has appointed a duly licensed driver and if the accident takes place when the vehicle is being driven by a person not duly licensed on the basis of the authority of the driver duly authorised to drive the vehicle whether the insurance company in that event shall be absolved from its liability?

After quoting Section 96 (1) of the Act, the contemplation therein has been recorded by the Supreme Court as under.

"In view of sub-section (1) of Section 96 if after the certificate of insurance has been issued in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy, the insurer shall subject to the provisions of the said section pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he was the judgment- debtor, in respect of the liability, sub-section (2) of Section 96 enjoins that notice of the proceedings in which the judgment is given, has to be given to the insurer and such insurer shall be entitled to defend the action on any of the grounds mentioned in sub-section (2) of Section 96. We are concerned in the present case only with Section 96 (2) (b) (ii), a condition excluding driving by any person who is not duly licensed. The question is as to whether the insurance company can repudiate its liability to pay the compensation in respect of the accident by a vehicle only by showing that at the relevant time it was being driven by a person having no licence".

With this the basic liability of the insurer when once the vehicle has been insured has been positively declared. In regard to the interpretation of Section 96 (1) the Supreme Court had to consider to declare the law as under:

"According to us, Section 96 (2) (b) (ii) should not be interpreted in a technical manner. Sub-section (2) of Section 96 only enables the insurance company to defend itself in respect of the liability to pay compensation on any of the grounds mentioned in sub-section (2) including that there has been a contravention of the condition excluding the vehicle being driven by any person who is not licensed. This bar on the face of it operates on the person insured. If the person who has got the vehicle insured has allowed the vehicle to be driven by a person who is not duly licensed then only that clause shall be attracted".

After dealing with the facts, it was concluded as hereunder:

''''Unless it is established on the materials on record that it was the insured who had wilfully violated the condition of the policy by allowing a person not duly licensed to drive the vehicle when the accident took place, the insurer shall be deemed to be judgment-debtor in respect of the liability in view of sub-section (1) of Section 96 of the Act. It need not be pointed out that the whole concept of getting the vehicle insured by an insurance company is to provide an easy mode of getting compensation by the claimants, otherwise in normal course they had to pursue their claim against the owner from one forum to the other and ultimately to execute the order of the Accident Claims Tribunal for realisation of such amount by sale of properties of the owner of the vehicle. The procedure and result of the execution of the decree is well known".

Now, being the defence of the insurance company relating to the driver carrying the passengers in a goods vehicle without express or implied authority of the owner of the vehicle to construe as to breach for not having valid licence by the driver, it must be mentioned from the declaration of law as above that it must be established with positive material that such a breach was committed by the owner of the vehicle wilfully and secondly that such a breach has been in violation of the express stipulation in the insurance policy and such a breach of the policy is not merely technical but real to construe the breach of the policy itself so as to read down the clause in the insurance policy. Unless all these ingredients are established, the Tribunal cannot think that the claimants cannot enforce their claim against the owner of the vehicle and the insurer.

In addition to the above settled law, the Supreme Court had an occasion to deal with the question of the breach of the policy wherein the passengers are carried in goods vehicle more than the number permitted in the terms of the insurance policy in B.V. Nagaraju Vs. M/s. Oriental Insurance Co. Ltd., Divisional Officer, Hassan, . Shandia''s case (2) (cited supra) has also been referred to therein. It was concluded therein that the alleged breach of the policy is not so fundamental a breach so as to afford to the insurer to eschew liability altogether because the exclusion term of insurance policy must be read down to serve main purpose of the policy; namely, to indemnify the owner of the vehicle which is insured with the insurance company. To read the very words in para 7 of the judgment of the Supreme Court:

"Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle, without the knowledge of owner, cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. The misuse of the vehicle was somewhat irregular though, but not so fundamental in nature so as to put an end to the contract, unless some factors existed which, by themselves had gone to contribute to the causing of the accident".

Even assuming that the insurer had such a defence by virtue of the provisions under Sections 95 and 96 in addition to the liability, the burden of proving the liability being absolved for certain reasons including the breach of terms of policy should be taken as heavily cast on the owner and insurer of the vehicle and not on claimants. The Tribunal appears to have presumed that the burden of proving such a circumstance as to the liability is on the claimants. The insurer in this case did not discharge the burden. This Court is not able to support such a view of the Tribunal which is opposed to true and settled law.

For the reasons so afforded above, dismissal of the claim petition by the Tribunal cannot be supported. Since the negligence of the driver of the lorry is said to be cause of the accident and since the vehicle belonging to the first respondent was insured with the second respondent and the amount of compensation determined at Rs. 73,000/- is not challenged by the respondents, there ought to be an award in favour of the claimant-appellants in addition to the other reliefs.

The appeal is therefore allowed. The award of the Tribunal is set aside dismissing the claim petition and the following award is passed.

The claimants shall be entitled to recover Rs. 73,000/- frorn the respondents with costs throughout and simple interest at 12% p.a. from the date of petition till the date of apportionment of the amount under the award among the claimants equally. The amount shall be deposited in accordance with the directions of the Supreme Court in the decision in General Manager, Kerala State Road Transport Corporation Trivandrum v. Susamma Thomas 1994 (2) SCC 335.