V. Ananthan vs Manoharan and The New India Assurance Co. Ltd.

R. Banumathi, J.—Challenge in this appeal is to the order of Motor Accidents Claims Tribunal made in M.C.O.P. No. 230/2002,

exonerating the Insurance Company from indemnifying the liability of the compensation payable to the appellant claimant who sustained injuries in

the road taraffic accident on 10.06.2000.

Brief facts which are necessary for disposal of these appeals are as follows: On 10.06.2000 at about 10.25 p.m., on Erode Mettur Road, near

Brinthavan Hotel, while the claimant was riding cycle driver of the TVS Suzuki bearing Registration No. TN 33 L 8489 drove the same in a rash

and negligent manner and dashed against the claimant, due to which, he sustained injuries on his left leg, face, upper teeth and lower teeth.

After the accident, the claimant was admitted in Government Hospital, Erode. Criminal case was registered against the rider of the two wheeler

in Cr. No. 997/2000 under Sections 279 and 330 IPC. Alleging that the accident was due to rash and negligent driving of two wheeler, claimant

has filed Petition u/s 166 M.V.4 Act claiming compensation of Rs. 3,00,000/-.

Opposing the claim, the Insurance Company has filed counter stating that it would be liable to pay compensation to the claimant only if the

insured has strictly complied with the terms and conditions of the policy, as stipulated in the policy and under M.V. Act. According to the

Insurance Company, the insured has to prove that he has not violated either the policy conditions of the M.V. Act or the Rules. The Insurance

Company has also disputed the age, income of the claimant, nature of injuries, duration of treatment and the alleged permanent disability.

Before the Tribunal, claimant examined himself as PW-1. Dr. Kathiravan was examined as PW-2. Exs. A-1 to A-12 were marked. On the side

of the respondent, Officer from the Insurance Company was examined as RW-1. Exs. B-1 to B-3 were marked. Upon consideration of oral and

documentary evidence, the Tribunal held that the accident was due to the rash and negligent driving of the rider of the two wheeler. The Tribunal

further held that the rider of the two wheeler did not possess driving licence and therefore, there was breach of conditions of policy and the

Tribunal held that the Insurance Company is not bound to indemnify the insured. Having regard to the injuries, the Tribunal has adopted multiplier

method and awarded total compensation of Rs. 1,29,750/- and held that the compensation is payable by owner of the vehicle/first respondent.

Challenging the order of the Tribunal, the learned Counsel for the Appellant has submitted that when there was a valid insurance policy, the

Tribunal ought to have held that the Insurance Company is liable to indemnify the insured. It was further submitted that in any event, following the

Swaran Singh''s case 2004 ACJ 1 (SC), Insurance Company is to be directed to pay the compensation amount to the claimant and later recover

the amount from the insurer.

The learned Counsel for the second respondent Insurance Company has submitted that the rider of the offending vehicle did not possess valid

driving licence and the Tribunal rightly exonerated the Insurance Company. It was further submitted that the Insurance Company had discharged

the burden cast upon it by issuing notice to the owner of the vehicle for producing the driving licence.

In the light of the contentions, the only point falling for consideration is whether as per Swaran Singh''s case 2004 ACJ 1 (SC), the Insurance

Company is to be directed to pay the compensation amount to the claimant and recover the compensation amount from the insurer.

There is no denying that motor cycle registration No. TN 33 L 8489 caused the accident, due to which, the claimant sustained injuries on his left

leg and face. The claimant had lost teeth both in the upper and lower jaw. Evidence of PW-1 claimant is to the effect that two wheeler was driven

in a rash and negligent manner and hit against the claimant and he sustained fracture in the teeth. The manner of accident is not in dispute.

Defence plea of Insurance Company is that the driver of two wheeler had no valid driving licence. Insurance Company had issued Ex. B-1

notice to the owner of the vehicle, calling upon him to produce the driving licence. Though the first Respondent has received the notice, no driving

licence was produced by the first Respondent. In Ex.A-4, Motor Vehicle Inspector Report, column No. 7 also, it is mentioned that the driving

licence particulars were not produced. Since the driving licence particulars are not forthcoming inspite of issuance of notice, it is to be deemed that

the first respondent had no valid driving licence.

As per the conditions of the Insurance Policy, driver should hold valid driving licence at the time of accident. When the driver of two wheeler

had no driving licence, it is a clear violation of policy conditions.

Of course, burden lies upon the Insurance Company to prove that the rider of the two wheeler did not possess a valid driving licence. To avoid

liability of payment of compensation, onus is always on the Insurance Company to prove that the rider of the two wheeler had no valid driving

licence. As stated earlier, to discharge the onus cast upon it, second respondent Insurance Company has issued notice calling upon the first

respondent to furnish particulars of driving licence. When no driving licence particulars was furnished by the first respondent, it is to be inferred that

the rider of the two wheeler had no valid driving licence. Evidently, there was breach of contract of insurance.

In National Insurance Co. Ltd. Vs. Swaran Singh and Others, the Supreme Court has clearly laid down that the liability of the Insurance

Company vis-a-vis the owner would depend upon several factors and that it was obligatory on the part of the owner to take adequate care to see

that the driver had an appropriate licence to drive the licence.

In Swaran Singh''s case Supreme Court summarized the findings to the various issues and in Paragraph 102, the Supreme Court inter alia has

held as follows:

(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third party risks is a social welfare legislation to

extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all

vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.

(ii) Insurer is entitled to raise a defence in a claim petition filed u/s 163A or Section 166 of the Motor Vehicles Act, 1988, inter alia, in terms of

Section 149(2)(a)(ii) of the said Act.

(iii) The breach of policy conditions, 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 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) ...

(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 of 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 insurer u/s 149(2) of the Act.

(vii) ...

(viii) ...

(ix) ...

(x) Where on adjudication of the claim under the Act the Tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in

accordance with the provisions of Section 149(2) read with Sub-section (7), as interpreted by this Court above, the Tribunal can direct that the

insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party

under the award of the Tribunal. Such determination of the claim by the Tribunal will be enforceable and the money found due to the insurer from

the insured will be recoverable on a certificate issued by the Tribunal to the Collector in the same manner u/s 174 of the Act as arrears of land

revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by Sub-section (3) of Section 168 of the Act

the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the

Tribunal.

Also in National Insurance Co. Ltd. Vs. Kusum Rai and Others, and 2006 ACJ 721 (SC) Nanjappan''s case, the Supreme Court has

reaffirmed the position in Swaran Singh''s case and has directed the Insurance Company to pay the compensation amount to the claimants with

option to recover from the insured by initiating proceedings before the Executing Court. The Insurance Company shall be at liberty to seek

recovery of the amount paid to the insured/claimant.

Insofar as the quantum, the insured in the accident sustained grievous injuries on his left leg and face, and he had also lost his teeth. After the

accident, claimant had taken treatment in Government Hospital, Erode and thereafter, continued his treatment in a private hospital. In his evidence,

PW-1 has stated that even after treatment, he is having pain in the left leg and that he is unable to walk, sit or squat. PW-2 Dr. Kathiravan who

examined the claimant had noticed mal-union of the left lower limb. Due to the fracture of the tibia, claimant is not in a position to carry on his

regular work. PW-2 had also noticed shortening of left leg by one centimeter and the movement of knee was painful and restricted. PW-2 has

assessed the permanent disability at 45% and issued Ex. A-11 Disability Certificate. At the time of accident, claimant was aged 22 years. His

annual income was taken as Rs. 15,000/- and the Tribunal has adopted multiplier 17 and awarded Rs. 1,14,750/- for permanent disability. Though

the Tribunal was not right in adopting the multiplier method, since the Tribunal has not awarded compensation for pain and suffering and other

heads, this Court is not inclined to interfere with the quantum of compensation. Having regard to the nature of injuries and the percentage of

disability, the quantum of compensation cannot be said to be excessive or unreasonable, warranting interference.

The quantum of compensation awarded by the Tribunal in M.C.O.P. No. 230/2002 is confirmed. However, the order of the Tribunal

exonerating the Insurance Company is set aside. This C.M.A. No is partly allowed. No costs.

Following the Judgment of the Supreme Court in Swaran Singh''s Case and Kusum Rai''s case, the Insurance Company shall pay the

compensation amount to the appellant/claimant and after paying the compensation, the Insurance Company may recover the amount from the

owner of the vehicle - the first Respondent in the same manner as was directed by the Supreme Court in the above decisions. The second

respondent Insurance Company is directed to deposit the compensation amount along with accrued interest within a period of three months from

the date of receipt of a copy of this order.