Sasidharan Nair vs Ali and Others

C.K. Abdul Rehim, J.—Claimant in O.P. (MV) No. 490 of 1996 on the files of the Motor Accidents Claims Tribunal, Perumbavoor is the appellant herein. The accident occurred on 1.1.1996 when a motor cycle bearing registration No. KL 5-C 8633 driven by the respondent No. 1 hit against the motor cycle in which the appellant-claimant was riding. The respondent No. 2 is the owner and respondent No. 3 is the insurer of the motor cycle bearing registration No. KL 5-C 8633. The respondent No. 1 remained ex parte before the Tribunal. Respondent No. 2 contended that the motor cycle in question belongs to him, but it was missing from Palai since 20.12.1995 as stolen by somebody. It is stated that only on getting information that the vehicle was involved in an accident at Perumbavoor and the police authorities had taken it into custody, he came to know about the motor cycle lost from his custody. It is further submitted that with respect to theft of the vehicle a criminal case had already been registered at Palai Police Station as Crime No. 512 of 1996. The respondent No. 2 admitted that the vehicle stands insured with the respondent No. 3. But he contended that the respondent No. 1 was not authorised to drive the vehicle and in fact he fled from the scene of occurrence on causing the accident.

The insurance company, respondent No. 3, denied their liability on the ground that since the person who was riding the motor cycle was not authorised by the respondent No. 2, there is no vicarious liability on the part of the respondent No. 2, which the respondent No. 3 is liable to indemnify. The respondent No. 3 also disputed the claim for compensation made under different heads as excessive and exorbitant.

On the basis of the documentary evidence relating to the criminal case registered in connection with the accident, the Tribunal found that the respondent No. 1 is negligent in causing the accident. But holding that the offending vehicle was not under the custody or control of the registered owner, respondent No. 2 and the respondent No. 1 was not a servant or authorised person of the respondent No. 2, the Tribunal found the respondent No. 2 as not liable to pay the compensation. The respondent No. 3, being the insurer, is therefore held as not liable since they are not bound to indemnify the respondent No. 2. The learned Tribunal relied on the judgment in New India Assurance Co. Ltd. Vs. Selvarajamani and Others, in support of the above findings. The Tribunal found that the claimant is entitled for a total compensation of Rs. 33,069. But the respondent No. 1 alone was held liable to make payment of the said amount. In this appeal the challenge is against exoneration of the respondent No. 3 from the liability. The appellant is also seeking enhancement of the compensation awarded by the Tribunal.

While considering the question regarding the liability of the insurer to compensate for death or bodily injury to third party involved in motor accident, the first question to be noticed is as to whether the insurer is liable to indemnify the insured. In this case, the contention of the respondent No. 3 that since the use of the vehicle was without knowledge or consent of the owner-insured and hence the insured has no vicarious liability with respect to the negligent act of the unauthorised person. But the fact remains that the vehicle in question is covered by a policy issued by respondent No. 3 at the time of accident. Therefore, it is necessary to look into the statutory obligation of the insured as provided u/s 147(5) of the Motor Vehicles Act. There is a statutory obligation cast upon the insurer to indemnify the persons or classes of persons specified in the policy in respect of any liability which the policy purports to cover. As per the statutory liability, the policy covers injuries sustained to third parties. u/s 149 of the Act the insurer of the vehicle is liable to satisfy the award of compensation to the person who is entitled to the statutory benefit of compensation. The only exemption which can be claimed by insurer is on any of the conditions as provided u/s 149(2). The question that arose for consideration is whether the insured can claim such exoneration based on the provisions contained in Section 149(2)(a)(ii)?

A single Bench of this Court in Oriental Insurance Company Ltd. Vs. Abdul Rasheed, , had occasion to consider the question regarding liability of the insurer in the case of a stolen vehicle causing accident. In the said decision it is observed as follows:

(13) The provisions of the said Act, as amended in 1994, as contained in Section 149(1) cast a statutory responsibility on the insurer to honour the awards passed by the Claims Tribunals and courts awarding compensation to the victims u/s 147(5) of the Act. The insurer shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability, which the policy covers, in the case of that person or those classes of persons, which include third party. In the case at hand, it is in evidence that O. Rajan did not authorise S.K. Sunil to drive his vehicle. S.K. Sunil was in control of the vehicle, he drove it and caused the accident. Therefore, accepting the principle contained in Rajasthan State Road Transport Corporation Vs. Kailash Nath Kothari and other etc., , the vehicle was fully under the control of S.K. Sunil. Hence he is also liable. But, as the insurance of the vehicle was valid, and in view of Sections 147(5) and 149(1) of the Act, appellant, insurance company shall satisfy the award and then realize the said award amount from S.K. Sunil, who caused the accident.

But the decision of the Hon''ble Supreme Court relied therein, Rajasthan State Road Transport Corporation Vs. Kailash Nath Kothari and other etc., relates to a case where a bus has been entrusted by its owner on hire to be plied by the State Road Transport Corporation and the accident took place when the bus was driven in violation of the conditions of the agreement of hire. The legal situation is totally different in a case where the vehicle was stolen from the owner and the accident occurred when the thief was driving the vehicle.

Learned Counsel for the respondent No. 3 had pointed out decision of a single Bench of High Court of Madras in New India Assurance Co. Ltd. Vs. Selvarajamani and Others, . It is held therein that in the case of the accident caused by a stolen vehicle and the accident caused due to negligence of the person who had stolen the vehicle, the insurance company cannot be made liable in the absence of any liability of the owner. But in the said case that court has not referred to the liability of the insurance company based on the provisions contained in Sections 147(5) and 149(2)(a)(ii).

The learned Counsel for the appellant had placed reliance on the decision of the Hon''ble Apex Court in National Insurance Co. Ltd. Vs. Nitin Khandelwal, . Considering the provisions contained u/s 149(2)(a)(ii) the Hon''ble Supreme Court observed that in case of theft of vehicle, nature of the use of vehicle cannot be looked into and the insurance company cannot repudiate the claim on that basis. But on the facts of the case, it is a claim made by the insured himself with respect to the damages sustained by him due to theft of the vehicle.

The Hon''ble Apex Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC) observed as follows:

The very concept of infringement or violation of promise that the expression ''breach'' carries within itself induces an inference that the violation or infringement on the part of the promisor must be a wilful infringement or violation. If the insured is not at all at fault and has not done anything he should not have done or is not amiss in any respect how can it be conscientiously posited that he has committed a breach? It is only when the insured himself places the vehicle in charge of a person who does not hold a driving licence, that it can be said that he is ''guilty'' of the breach of the promise that the vehicle will be driven by a licensed driver. It must be established by insurance company that the breach was on the part of the insured and that it was the insured who was guilty of violating the promise or infringement of the contract. Unless the insured is at fault and is guilty of a breach the insurer cannot escape from the obligation to indemnify the insured and successfully contend that he is exonerated having regard to the fact that the promisor (the insured) committed a breach of his promise. Not when some mishap occurs by some mischance. When the insured has done everything within his power inasmuch as he has engaged a licensed driver and has placed the vehicle in charge of a licensed driver, with the express or implied mandate to drive himself it cannot be said that the insured is guilty of any breach. And it is only in case of a breach or a violation of the promise on the part of the insured that the insurer can hide under the umbrella of the exclusion clause.

Relying on the above said decision the Hon''ble Supreme Court in United India Insurance Company Ltd. Vs. Lehru and Others, observed as follows:

(15) Now let us consider Section 149(2). Reliance has been placed on Section 149(2)(a)(ii). As seen in order to avoid liability under this provision it must be shown that there is a ''breach''. As held in Skandia''s case 1987 ACJ 411 (SC) and Sohan Lal Passi Vs. P. Sesh Reddy and others, , the breach must be on the part of the insured. We are in full agreement with that. To hold otherwise would lead to absurd results. Just to take an example, suppose a vehicle is stolen. Whilst it is being driven by the thief there is an accident. The thief is caught and it is ascertained that he had no licence. Can the insurance company disown liability? The answer has to be an emphatic ''No''. To hold otherwise would be to negate the very purpose of compulsory insurance. The injured or relatives of person killed in the accident may find that the decree obtained by them is only a paper decree as the owner is a man of straw. The owner himself would be an innocent sufferer. It is for this reason that the legislature, in its wisdom, has made insurance, at least third party insurance compulsory. The aim and purpose being that an insurance company would be available to pay. The business of the company is of insurance. In all businesses there is an element of risk. All persons carrying on business must take risks associated with that business. Thus it is equitable that the business which is run for making profits also bears the risk associated with it. At the same time innocent parties must not be made to suffer or loss. These provisions meet these requirements. We are thus in agreement with what is laid down in aforementioned cases, viz., that in order to avoid liability it is not sufficient to show that the person driving at the time of accident was not duly licensed. The insurance company must establish that the breach was on the part of the insured.

(Emphasis supplied)

Relying on the dictum laid in the decisions of the Hon''ble Supreme Court cited above and considering the provisions contained in Section 149(2) it is clear that in order to avoid liability for payment of the amounts due to a third party who sustained injury in a vehicle which is properly insured, in view of Section 149(2)(a)(ii) the insurer should prove that there is a ''breach'' on the part of the insured. The theft of the vehicle and unauthorised use by the person who had stolen the vehicle cannot be termed as a breach committed by the insured. Therefore, the insurer cannot be exonerated from the liability to satisfy the award in favour of a third person.

Of course the insurer will be always at liberty to recover such payments from the person who is liable. In the case at hand the insured cannot be held liable for payment since there is no vicarious liability for the negligence on the part of the person who caused the accident. But with respect to liability of the rider of the motor vehicle, the insurer is not liable to indemnify such liability. Further, there is no evidence forthcoming in the case to disprove the contention of the insurer that the respondent No. 1 was not holding any valid licence at the time of the accident. Hence, at any rate, respondent No. 1 is liable for payment of the amount of compensation. But considering the provisions in Sections 147(5) and 149(2)(a)(ii) we are inclined to hold that the insurance company, respondent No. 3, is liable for payment of the award amount, subject to their right of recovery as provided under the proviso to Sub-section (4) of Section 149 against the respondent No. 1.

With respect to the quantum of compensation the learned Counsel appearing for the appellant vehemently contended that the Tribunal has not accepted certificate issued from a private dental clinic, Exh. A8, wherein it is certified that the claimant had sustained mobility of 14 teeth and they were extracted. But the Tribunal on an evaluation of the medical records issued from the hospital wherein the claimant was treated at the first instance, such as accident register-cum-wound certificate, Exh. A5; discharge summary, Exh. A6 and treatment certificate, Exh. A7 observed that the claimant suffered injury only to one tooth, the upper central incisor. We do not find any reason to negative such a finding. On consideration of the amounts awarded under various heads we are of the considered opinion that the compensation awarded is just and reasonable. Therefore, we do not propose to interfere with the award for enhancing the compensation.

In the result, appeal is partly allowed. The findings of the Tribunal with respect to liability of the respondent No. 3 for payment of compensation is hereby modified holding that the insurance company, respondent No. 3, is liable to make payment of the amount awarded by the Tribunal to the claimant in terms of the award. But it is made clear that on such payment the insurance company, respondent No. 3 is at liberty to recover the amount from the respondent No. 1.