PANORAMA CONSTRUCTIONS vs Oriental Insurance Company Ltd.

THE challenge in this Appeal is the order of District Forum, South Goa, dated 20.3.1998, in Complaint No. 401/93, whereby the same was dismissed by the Forum.

THE complainant/appellant had approached the Forum as the owner of a light motor vehicle, bearing No. GA-02-T-5354, of make Mahindra Alwyn Nishan which was insured with the respondent for the period from 7.9.1992 to 8.9.1993. On 26.5.1993 the vehicle met with an accident and fell in a river of salt water, near Mashem temple, at Canacona, while trying to avoid a dash against a stray cattle. A complaint was lodged on the same day in the police station and the Panchanama was drawn on 27.5.1993. THE respondent was also informed about the accident by letter dated 27.5.1993. At the time of the accident the vehicle was driven by one Jose Maric Fernandes, driver of the appellant, who was holding a valid driving licence to drive light motor vehicles for the period from 2.11.1992 to 1.11.2012. THE appellant''s further case is that the said driver was authorised to drive transport vehicles as a professional through an endorsement to that effect which was valid till 13.5.1996. After the accident the respondent deputed to the spot Surveyor Shri Diwane who visited the site, perused the xerox copy of the licence of the driver, drew photographs and authorised the appellant to remove the vehicle from the salt water. THEreupon the appellant submitted the claim form to the respondent on 7.6.1993 alongwith the estimate sheet of damages prepared by M/s. P.G. Virgincar and Co. for an amount of Rs. 2,33,222.31. In addition the appellant spent a sum of Rs. 7,000/- to remove the vehicle from the site of the accident. THE respondent deputed their Surveyor Shri Y.S. Kamat who inspected the vehicle once again. THEreafter the respondent allowed the complainant to get the vehicle repaired through their letter dated 5.7.1993 and asked to submit the police Panchanama and the driving licence in original, which were sent to them by the appellant. On 16.9.1993 the appellant wrote to the respondent to expedite the settlement of their claim but the respondent, by their letter dated 22.9.1993, informed the appellant about their inability to clear it on the ground that the driver was not holding an effective driving licence and, thus, they have contravened the provision of Sub-section (1) of Section 3 of Motor Vehicles Act. The respondent''s stand is that the appellant''s vehicle is a transport with public goods carrier permit. Since the driver of the vehicle Jose Mario Fernandes was not having an effective licence to drive such vehicles, the appellant''s claim was disallowed. Under Section 3 of Motor Vehicles Act, 1988, a person holding a non professional licence could not drive a transport vehicle or a public service vehicle. Thus the violation of Section 3 of the Motor Vehicles Act has rendered the policy void for breach of its terms and conditions and the insurer stood discharged from any liability arising under the policy. The respondent further claimed that, under Section 5 of the Motor Vehicles Act, the appellant was duty bound not to cause or permit any person who does not satisfy the provisions of Section 3 to drive vehicles. Therefore, the conduct of the appellant in entrusting the vehicle to a non qualified driver could not be said to be bona fide. They also denied that there was delay in processing the appellant''s claim.

We have heard learned Counsel and also gone through the records. The basic facts regarding the occurrence of the accident and the circumstances of the vehicle of the appellants being insured with the respondent as a light motor vehicle are not disputed. What was disputed is that the licence which the appellant''s driver was holding was an effective licence to drive the particular type of vehicle for lack of a competent endorsement in the licence as professional to be stamped by the concerned authorities. To that extent it is the respondent''s contention that such violation of Section 3(1) of Motor Vehicles Act (hereinafter called the Act) read with its Section 2(47), which defines "transport vehicle" as a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle, absolves the Insurance Company from any liability to pay compensation in view of the relevant Exclusion Clause as provided in the policy. Reliance placed for this purpose on the judgment of the National Commission in the case of Oriental Insurance Company Limited v. Ashok, II (1995) CPJ 208 (NC)=1995 (2) CPR 5358, which the learned Forum also accepted as holding good law, does not however appear, with respect to be either conclusive or binding on us although apparently there might be some substantial similarity as far as its factual position is concerned. Indeed, on a careful perusal of the aforesaid National Commission''s judgment it is manifest that it seems to have been passed incuriam without even adverting to the guiding principles laid down by the Apex Court in the matter of construction of the insurance liability towards the insurer on the basis of the Exclusion Cause inserted in the policy. In Skandia Insurance Company Limited v. (sic) Chandravadan & Ors., AIR 1987 Supreme Court 1184, while dealing with the question of immunity of the Insurance Company if a breach is committed of the conditions excluding driving by a person fully not licensed or by a person who has been disqualified for holding or obtaining a driving licence during the period of disqualification, the Supreme Court has clearly held that the expression "breach", which carries in it the concept of infringement or violation of the promise, induces an inference that such violation or infringement on the part of the promisor must be a wilfull infringement or violation. Unless the insured is at fault and guilty of a breach the insurer cannot escape from the obligation to indemnify the insured and successfully contend that he is exonerated on account of the breach of the promise committed by the insured promisor. What is prohibited by law must be treated as a mandate to the licensed driver employed by the insured and should be considered sufficient in the eye of law for excusing non-compliance with the conditions. It cannot, therefore, in any case considered as a breach on the part of the insured. To construe the provision differently would be to re-write the provision by engrafting a rider to the effect that in the event of the motor vehicle happening to be driven by an unlicensed person, regardless of the circumstance in which such a contingency occurred (emphasis supplied), the insurer will not be liable under the contract of insurance. The Court further adverted that it is not the contract of insurance but the statutory provision defining the conditions of exemptions which are actually being interpreted. These should be, therefore, construed or interpreted in the spirit in which the same have been enacted so as to ensure that the protection is not nullified by an interpretation which serves to defeat rather than to fulfill the life aim of the provision. A similar view was also taken by the Supreme Court in the case of B. Nagarajan v. M/s. Oriental Insurance Co. & Ors., II (1996) CPJ 28 (SC)=AIR 1996 SC 2054, wherein it was expressly ruled that in accord with Scandia''s case (supra) the exclusion clause of the Insurance Policy must be read down so as to serve the main purpose of the Policy, i.e., to indemnify the damage caused to the vehicle and in this regard strict construction of such clause should not be encouraged. This was the case concerning damages caused to the vehicle on a head on collision wherein its owner had put a claim for compensation and the insurer alleged breach of carrying human beings in a goods transport vehicle more than the number permitted in terms of the insurance policy. The Supreme Court observed that it was not so fundamental a breach so as to afford to the insurer to eschew liability altogether. Merely by permitting a person or two or even three by the driver or a cleaner of the vehicle, without the knowledge of the owner, cannot be said to represent to be such a fundamental breach resulting 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 (emphasis supplied). Thus in the consistent and prevailing opinion of the Supreme Court, the exclusion terms of the insurance policy must therefore be read down so as to serve the main purpose of the policy i.e., to indemnify the damage caused to the vehicle.

WE are, therefore, satisfied that it is only when the insured is guilty of a deliberate breach of the conditions of the policy and the nature of the breach is a fundamental one, rather than a technical and formal deficiency, which can be said that has been contributory to the accident, that the exclusion clause is able to be successfully invoked in order to absolve or exonerate the insurer from its liability to indemnify. In the instant case, we find that the appellant''s driver''s licence, though valid to ply light motor vehicles, was not having, at the relevant time, an endorsement of being professional in order to enable him, as per the respondent''s contention, to ply a transport goods vehicle, irrespective of the fact that the definition of a light motor vehicle includes also a transport vehicle when its laden weight is less than 7,500 kilograms, as it happens in the case of the insured vehicle. Further, the evidence of the Asstt. Director of Transport Dilip Nagvenkar shows that for such endorsement in the driver''s valid licence, so as to make it formally effective, no additional aptitude test was required and the endorsement could be stamped just on the driver''s simply asking. There is also nothing on record to suggest that the owner of the vehicle was aware of this technical deficiency in the licence of his driver which could disentitle him to legally ply his vehicle. There is also no evidence to indicate that the driver was disqualified or could be disqualified to drive transport goods vehicles during the relevant period or getting his licence endorsed as professional. On the contrary, the record shows or the respondent has not disputed that such endorsement was actually stamped on the driver''s licence on or about 14.6.1993, barely one month after the accident. It thus follows that the violation of Section 3 of the Act, being merely a technical deficiency, could at the most attract for the driver an adequate penalty as provided in the law for the contravention committed on this Court. The record, however, again shows that the driver was not even booked by the police for any such contravention in the criminal case filed against him in the Court of the Judicial Magistrate, First Class, Canacona, wherein he was convicted and sentenced under Section 8 read with Section 181 of the Motor Vehicles Act. There is also nothing to point out that the alleged violation or the absence of an endorsement as professional stamped in the driver''s licence could be said to be a fundamental one and affecting the very nature of licence or that the owner of the vehicle knew about this deficiency and its legal implications, being thus guilty of the breach and also that such deficiency had, by any means, directly contributed to the causing of the accident.

THIS being the position and in the light of the letter and spirit of the aforesaid pronouncements of the Supreme Court, we are of the opinion that the ruling of the National Commission heavily relied by the learned Forum to justify the dismissal of the appellant''s complaint is clearly distinguishable and cannot be held, with due respect, as good law in the facts and circumstances of the case. In the result, the impugned order of the Forum cannot be sustained being, therefore, bound to be quashed and set aside. Instead, on the admitted facts and the relevant material on record, we are of the view that the appellant''s prayer for compensation to the tune of Rs. 3,75,945.97, as claimed by them towards mental and moral loss, is to be allowed in full consequent upon the clear deficiency in service on the respondent''s part in not duly settling their dues within a reasonable period of time which, according to us, should not go beyond 4 months. We, therefore, allow this appeal and direct the respondent to pay to the appellants, within 30 days, the said amount with interest at the rate of 18% per annum from 7.10.1993, i.e., after a period of 4 months from the date of the claim, till its actual payment, with costs which we quantify in both the instances at Rs. 3,000/-. Order accordingly. Appeal allowed with costs.