United India Insurance Company Ltd. vs Sukh Ram Sharma and Others

Mansoor Ahmad Mir, C.J—A vehicular traffic accident has given birth to these three appeals, thus I deem it proper to determine these appeals by this common judgment.

These appeals are outcome of the awards made by the Motor Accident Claims Tribunal, Kinnaur at Rampur Bushahr (hereinafter referred to as ''the Tribunal'') in different claim petitions filed by the claimants for grant of compensation, as per the break-ups given in the respective claim petitions (for short ''the impugned awards'').

FAO No. 166 of 2008 is directed against the award dated 1st January, 2009, passed in MAC Petition No. 45 of 2007, titled Sh. Sukh Ram Sharma versus Sh. Pradeep Kumar & others, whereby compensation to the tune of Rs. 1,19,579/- with interest at the rate of 9% per annum was granted in favour of the claimant-respondent No. 1 and against the insurer-appellant.

By the medium of FAO No. 167 of 2008, the appellant-insurer has questioned the award dated 1st January, 2009, passed in MAC Petition No. 54 of 2007, titled Sh. Tapender Thakur versus Sh. Pradeep Kumar & others, whereby compensation to the tune of Rs. 38,962/- with interest at the rate of 9% per annum was granted in favour of the claimant-respondent No. 1 and the insurer-appellant herein was saddled with liability.

Subject matter of FAO No. 168 of 2008 is the award dated 1st January, 2009, passed in MAC Petition No. 6 of 2008, titled Sh. Sukh Ram Sharma versus Sh. Pradeep Kumar & others, whereby compensation to the tune of Rs. 27,000/- with interest at the rate of 9% per annum was granted in favour of the claimant-respondent No. 1 and the insurer-appellant herein was saddled with liability.

The claimants, the owner-insured and the driver of the offending vehicle have not questioned the impugned award on any count, thus, has attained finality so far it relates to them.

The insurer has questioned the impugned awards on the grounds taken in the memo of appeals.

The only question involved in these appeals is-whether the offending vehicle, i.e. Mahindra Pick-Up bearing registration No. HP-09A-1169 falls within the definition of ''Light Motor Vehicle''?

This Court in the series of cases, FAO No. 538 of 2007, titled Oriental Insurance Company Ltd. versus Sh. Khem Chand & others, decided on 27.02.2015, being one of them, has held that Mahindra-Pick-Up is a ''light motor vehicle''.

Admittedly, the driver was driving Mahindra Pick-Up, the gross vehicle weight of which is 2750 kilograms, as per the Registration Certificate, Ext. RA, is a light motor vehicle.

The Apex Court in the case titled as National Insurance Co. Ltd. Vs. Swaran Singh and Others, (2004) 1 ACC 1 : (2004) ACJ 1 : AIR 2004 SC 1531 : (2004) 118 CompCas 396 : (2004) 1 JT 109 : (2004) 136 PLR 510 : (2004) 1 SCALE 180 : (2004) 3 SCC 297 : (2004) 1 SCR 180 : (2004) AIRSCW 663 : (2004) 1 Supreme 243 , has laid down principles, how can insurer avoid its liability. It is apt to reproduce relevant portion of para 105 of the judgment herein:

"105......................

(i).........................

(ii)........................

(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 condition 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 the available defence(s) raised in the said but must also establish ''breach'' on the part of the owner of the vehicle; the burden of proof wherefore would be on them.

(v).........................

(vi) 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 insurer 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 defences available to the insured under Section 149(2) of the Act."

In a case titled as Lal Chand Vs. Oriental Insurance Co. Ltd., (2006) 3 ACC 731 : (2006) ACJ 2161 : (2006) 133 CompCas 343 : (2007) 10 JT 122 : (2006) 144 PLR 741 : (2006) 8 SCALE 531 : (2006) 7 SCC 318 : (2006) 5 SCR 210 Supp , the owner had performed his job whatever he was required to do and satisfied himself that the driver was having valid driving licence. The Apex Court held the insurer liable. It is apt to reproduce paras 8, 9 and 11 of the judgment herein:

"8. We have perused the pleadings and the orders passed by the Tribunal and also of the High Court and the annexures filed along with the appeal. This Court in the case of United India Insurance Company Ltd. Vs. Lehru and Others, (2003) 1 ACC 611 : (2003) ACJ 611 : AIR 2003 SC 1292 : (2003) 2 JT 595 : (2003) 3 SCALE 181 : (2003) 3 SCC 338 : (2003) 2 SCR 495 : (2003) 1 UJ 679 : (2003) AIRSCW 1695 : (2003) 2 Supreme 768 , in paragraph 20 has observed that 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). He will, therefore, have to check whether the driver has a driving licence and 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 test of the driver, and if he finds that the driver is competent to drive the vehicle, he will hire the driver.

In the instant case, the owner has not only seen and examined the driving licence produced by the driver but also took the test of the driving of the driver and found that the driver was competent to drive the vehicle and thereafter appointed him as driver of the vehicle in question. Thus, 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) and the Insurance Company would not then be absolved of its liability.

10..............................

As observed in the above paragraph, the insurer, namely the Insurance Company, has to prove that the insured, namely the owner of the vehicle, was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by a duly licensed driver or one who was not disqualified to drive at the relevant point of time."

It would also be profitable to reproduce para 10 of the judgment rendered by the Apex Court in Pepsu Road Transport Corporation Vs. National Insurance Company, (2014) 2 ACC 18 : (2013) 3 ACC 871 : (2013) ACJ 2440 : AIR 2014 SC 305 : (2013) 4 CPJ 84 : (2013) 4 PLR 750 : (2013) 4 RCR(Civil) 273 : (2013) 10 SCALE 663 : (2013) 10 SCC 217 : (2014) 1 SCC(L&S) 750 , herein:

"10. In a claim for compensation, it is certainly open to the insurer under Section 149(2)(a)(ii) to take a defence that the driver of the vehicle involved in the accident was not duly licensed. Once such a defence is taken, the onus is on the insurer. But even after it is proved that the licence possessed by the driver was a fake one, whether there is liability on the insurer is the moot question. As far as the owner of the vehicle is concerned, when he hires a driver, he has to check whether the driver has a valid driving licence. Thereafter he has to satisfy himself as to the competence of the driver. If satisfied in that regard also, it can be said that the owner had taken reasonable care in employing a person who is qualified and competent to drive the vehicle. The owner cannot be expected to go beyond that, to the extent of verifying the genuineness of the driving licence with the licensing authority before hiring the services of the driver. However, the situation would be different if at the time of insurance of the vehicle or thereafter the insurance company requires the owner of the vehicle to have the licence duly verified from the licensing authority or if the attention of the owner of the vehicle is otherwise invited to the allegation that the licence issued to the driver employed by him is a fake one and yet the owner does not take appropriate action for verification of the matter regarding the genuineness of the licence from the licensing authority. That is what is explained in Swaran Singh case. If despite such information with the owner that the licence possessed by his driver is fake, no action is taken by the insured for appropriate verification, then the insured will be at fault and, in such circumstances, the Insurance Company is not liable for the compensation."

Having said so, it cannot be said that the driver was not having a valid and effective driving licence at the time of accident. Thus, the Tribunal has rightly saddled the insurer with the liability.

Accordingly, the impugned awards are upheld and the appeals are dismissed.

Registry is directed to release the awarded amount in favour of the claimants, strictly as per the terms and conditions contained in the impugned awards, after proper identification.

Send down the record after placing copy of the judgment on the Tribunal''s file.