| SooperKanoon Citation | sooperkanoon.com/427646 |
| Subject | Motor Vehicles;Insurance |
| Court | Andhra Pradesh High Court |
| Decided On | Feb-27-2009 |
| Case Number | C.M.A. No. 3026 of 1999 |
| Judge | V.V.S. Rao, J. |
| Reported in | 2010ACJ165; AIR2009AP142; 2009(3)ALT121 |
| Acts | Motor Vehicles Act, 1988 - Sections 2(10), 2(34), 3, 4, 5, 140, 143A, 145, 146, 147, 147(2), 147(3), 147(5), 149, 149(2), 149(7), 163A and 166; Contract Act, 1872 - Sections 124 and 125; Insurance Act, 1938 - Sections 2(9); Motor Vehicles Act, 1939 - Sections 93 to 111; General Insurance Business (Nationalisation) Act, 1972; Indian Penal Code (IPC), 1860 - Sections 337 |
| Appellant | National Insurance Company Limited Rep. by Its Divisional Manager |
| Respondent | Dupati Singaiah and ors. |
| Appellant Advocate | Kota Subba Rao, Adv. |
| Respondent Advocate | N. Subba Rao, Adv. for Respondent No. 1 |
| Disposition | Appeal allowed |
V.V.S. Rao, J.
Question for determination
1. When the driver of a motor vehicle covered by a policy of insurance drives vehicle involved in accident with fake licence, whether insurance company has to prove that there is 'wilful' breach of specific conditions of policy or is it sufficient to insurance company to prove that driving licence possessed by driver is fake licence by reason of which insurance company stands exonerated from its liability to indemnify owner of vehicle involved in the accident.
Background facts
2. The above question falls for consideration in this appeal in the following brief background of the case. Respondents 1 to 4 herein (hereafter, claimants) filed M.V.O.P. No. 248 of 1997 under Sections 140, 143A and 166 of Motor Vehicles Act, 1988 (the Act, for brevity) before Motor Accident Claims Tribunal-cum-l Additional District Judge, Guntur, claiming a compensation of Rs. 2,00,000/- as compensation for death of Dupati Koteswari (deceased). Be it noted first claimant is husband and claimants 2 to 4 are married daughters of deceased. Deceased aged 42 years statedly was earning Rs. 1,200/- per month as agricultural labourer. On 16.4.1997 at about 9.30 pm while she was walking from Doppalapudi cross roads to go to festival (Sreerama Navami) fair, milk lorry bearing No. AP 16T 936 belonging to Bondadi Srinivasa Rao (owner-fifth respondent herein) dashed against her. She sustained head and spinal cord injuries and became unconscious. She was shifted to Hospital. After three days, she succumbed to injuries. Offending lorry was insured with appellant (insurer). In Original Petition, owner of vehicle and insurer are arrayed as respondents 1 and 2 respectively.
3. Owner of vehicle remained ex parte. Insurer filed written statement contending that driver did not hold valid licence and that claimants 2 and 3 being married daughters are not entitled for compensation. Besides these, they also disputed quantum of compensation.
4. Learned Tribunal besides believing evidence of claimants on the question of negligence also applied principle of res ipso loquitur [sic] and held that driver of insured lorry drove the vehicle in a rash and negligent manner. Rejecting the plea of appellant insurer seeking exoneration on the ground that driver was having a fake licence, and therefore, there was breach of specific condition of policy, learned Tribunal awarded a sum of Rs. 1,60,000/- as compensation in favour of first respondent duly dismissing claim of married daughters.
5. In this appeal learned Counsel for appellant raised following contentions. Learned Tribunal fell in error in appreciating evidence of R.Ws.1 to 3 and Exs.6-1 to B-4 which according to learned Counsel would show that driver of vehicle Vongati Issac used fake licence and that driving licence No. 2432/VJA/83 was in fact issued to one P. Rama Krishna, s/o. Gopaiah of Governorpet.
6. Learned Counsel for respondent/claimant argued as follows. Merely because driver of vehicle involved in accident was having fake licence, insurer cannot escape from liability unless they show that there was 'wilful' breach of conditions of insurance policy in allowing a person with fake driving licence to drive vehicle. At the relevant time, driver was having a licence, which was found to be fake. Therefore it does not mean that owner (fifth respondent) allowed Issac knowing fully well that driver was having a fake licence. When driving licence is produced before him owner is not expected to know whether licence is take or forged one. In the absence of any other evidence to show that owner has not taken diligent steps or negligent in verifying driving licence, owner must be indemnified for vicarious liability incurred due to accident. He placed reliance on National Insurance Co. Ltd. v. Swaran Singh : AIR2004SC1531 , United India Insurance Co. Ltd. v. Gian Chand : AIR1997SC3824 and Oriental Insurance Co. Ltd. v. Meena Variyal : AIR2007SC1609 .
Principles of Law
7. Motor Vehicles Act does not define word 'insurance' or 'insurance policy'. In common law and as per provisions of Indian Contract Act, 1872, insurance policy is similar contract of indemnity. Section 124 of Contract Act defines 'contract of indemnity' as 'a contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person.' It is a kind of contract of indemnity as held by Calcutta High Court in Chandmull Jain v. General Assurance Society Ltd. : AIR1959Cal558 . Section 125 of Contract Act, which speaks of rights of indemnity holder when sued and conditions subject to which he can enforce such rights is important and reads as under.
125. Rights of indemnity-holder when sued.-The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor:
(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(2) all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the suit;
(3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contrary to the orders of the promisor; and was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, or if the promisor authorised him to compromise the suit.
(emphasis supplied)
8. If the promisee contravenes orders of promissor and failed to act as it would have been prudent for him to act, the promisor of indemnity is not bound to pay damages which he may become compelled in respect of any matter to which the promise to indemnify applies.
9. Insurance Act, 1938, is an Act regulating business of insurance in India. Section 2(9) of this Act defines 'insurer' means inter alia a body corporate carrying on business with the object of obtaining insurance business in India. This Act also does not define 'contract of insurance'. By the time Motor Vehicles Act, 1939, was enacted, law of tort governed claims in respect of motor accident deaths to some extent. The need was felt for special enactment to regulate motor vehicles as well as mechanically propelled vehicles used on the roads, started so that succour to motor accident victims can be provided. More often than not the offending vehicle hit and run. Such accidents became rampant. It was not possible to trace vehicle and even if it is traced it was not possible to recover damages for negligence on the part of driver of vehicle and from owner of accident vehicle. Therefore Motor Vehicles Act, 1939 contained Sections 93 to 111 providing for compulsory insurance of motor vehicles against third party risks and remedies to third parties. This provision enabled insurer to seek exemption from indemnity if insured violated any condition of policy.
10. In 1988 Act, Chapter XI (Sections 145 - 164) was enacted regulating insurance of motor vehicles against third party risks. Section 145 of the Act defines seven terms used in that chapter. As per Section 145(a) of the Act 'authorised insurer' means an insurer carrying on general insurance business in India under the General Insurance Business (Nationalisation) Act, 1972. A 'policy of insurance' includes certificate of insurance, which means a certificate issued by an authorized insurer under Section 147(3) of the Act. Section 146 of the Act prohibits any person to use motor vehicle in public place unless it is covered by policy of insurance complying with requirements of Chapter XI of the Act. A 'public place' as per Section 2(34) of the Act means a road, street, way or other place, whether a thoroughfare or not, to which the public have a right of access, and includes any place or stand at which passengers are picked up or set down. Be that as it is what are the mandatory requirements of a policy of insurance for plying motor vehicle under Section 146 of the Act? Section 147 of the Act contains these requirements to cover against any liability, which may be incurred by insured in respect of death or bodily injury of a third party. An analysis of Section 147 of the Act would show that there are three categories of persons or third parties who are covered by a policy of insurance. These are third parties in the sense that they are neither owners nor the insurers. Secondly, the owner of the goods or his representative carried in the vehicle and thirdly drivers of vehicles. In addition to this, goods carried in vehicles are also covered. However, the liability of the insured is to the extent specified in Sub-section (2) of Section 147 of the Act, namely, the amount of liability incurred in case of persons and an amount not exceeding Rs. 6,000/- in case of damage to property of third party.
Effect of policy of insurance
11. What is the effect of policy of insurance issued under Section 146 of the Act complying with requirements adumbrated in Section 147 of the Act? As per Section 147(5) of the Act, insurer issuing a policy of insurance under Section 147 (read with Section 146) of the Act shall be liable to indemnify person or classes of persons specified in the policy (insured) in respect of any liability, such policy purports to cover in case of that person or those classes of persons (insured). Indemnity granted by insurer to insured is not an absolute obligation requiring insurer to indemnify insured in all situations and circumstances. The policy of insurance is in respect of only third parties who are not privy to insurance contract between insurance company and owner of vehicle. When a valid policy covers motor vehicle, it is a statutory duty on the part of insurer to satisfy judgments and awards obtained by third parties against insured notwithstanding that insurer is entitled to avoid or cancel the policy. As per Sub-section (7) of Section 149 of the Act, no insurer shall be entitled to avoid liability to any person entitled to the benefit of judgment or award otherwise than in the manner provided for in Sub-section (2) of Section 149 of the Act. Section 149(2) of the Act is a comprehensive provision under which the insurer is not liable to satisfy judgment and decree obtained against insured by third parties suffering legal injury due to negligence in driving of vehicle. The same reads as under.
Section 149(2) No sum shall be payable by an insurer under Sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:
(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:
(i) a condition excluding the use of the vehicle:
(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or
(b) for organised racing and speed testing, or
(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or
(d) without side-car being attached where the vehicle is a motor cycle; or
(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or
(b) that the policy is void on the ground that it was obtained by the nondisclosure of a material fact or by a representation of fact which was false in some material particular.
(emphasis supplied)
12. A reading of the above subsection would show that insurer can avoid liability if there is breach of specified condition of policy. Liability can also be avoided on the ground that policy was obtained by nondisclosure of material fact or by making false representation in some material particular as per Section 149(2)(b) of the Act. Section 149(2)(a) of the Act contains two parts. First part [Section 149(2)(a)(i)j enumerates four conditions of policy, the breach of which exonerates insurer. These are: use of vehicle for hire/reward when it is not covered by a permit to do so, use of vehicle for organized racing or speed testing, use of vehicle for the purpose not allowed by permit under which the vehicle is insured or breach of a condition that motor vehicle should be used without sidecar being attached. These are specific conditions dealing with uses of vehicle, which are prohibited under the policy. Section 149(2)(a)(ii) of the Act deals with licence to drive a vehicle. If the insured vehicle is allowed to be driven by a person who is not duly licensed or by any person who has been disqualified for holding/obtaining driving licence during the period of disqualification. In addition to these, Section 149(2)(a)(iii) of the Act enables the insurer to seek exoneration when the injury is caused/contributed by conditions of war, civil war, not or civil commotion.
13. In simplest terms if driver of insured vehicle does not possess a valid licence or he is not qualified for holding such licence, the Act does not contemplate insurer to discharge obligation of indemnifying the insured. The term, 'driving licence' is defined in Section 2(10) of the Act as to mean licence issued by a competent authority under Chapter II of the Act authorizing the person specified therein to drive a motor vehicle of specified class or description. Section 3 of the Act in absolute terms prohibits a person from driving a motor vehicle in public place unless such person holds an 'effective' driving licence issued authorizing him to drive the vehicle. Section 3 of the Act also prohibits any person from driving a transport vehicle unless driving licence specifically entitles him to do so. The term, 'fake driving licence' is not defined any where in the Act. Section 149(2)(a)(ii) of the Act gives a right to insurer to seek exemption from the policy if the vehicle is driven by a person not having a valid and effective driving licence. Thus by necessary corollary a person having fake licence shall have to be deemed a person not having valid and effective driving licence in view of language used in Section 3 of the Act.
14. In Swaran Singh (1 supra), Supreme Court was concerned with interpretation of Section 149(2)(a)(ii) of the Act in respect of three distinct situations: (i) when admittedly no licence was obtained by person and driving licence was found to be fake; (ii) when driver has only 'learner's licence'; and (iii) when driver is granted licence for one type of vehicle and at the time of accident he was driving another type of vehicle. After making reference to entire case law, Supreme Court held that (i) in case where driver of vehicle admittedly did not hold licence and the same was allowed consciously to be driven by owner of the vehicle, the insurer is entitled to exoneration from its liability, (ii) when insurer takes plea that driver's licence is fake, the defence can only succeed when it is proved that insured did not take adequate care and caution to verify the genuineness or otherwise of the licence held by the driver; (iii) learner's licence is also a licence allowing holder of learner's licence to drive the vehicle does not amount to breach of condition under Section 149(2) of the Act; and (iv) that the Tribunal has to take a decision as to whether effect of driver possessing licence for one type of vehicle and found driving another type of vehicle was the main or contributory cause of accident and if it is found that the accident occurred solely because of some unforeseen or intervening causes like mechanical failure or some other cause having no nexus with driver not possessing requisite type of licence, insurer will not be liable to be allowed to avoid its liability merely on technical breach of conditions concerning driving licence.
15. In paragraph 110 (SCC), Supreme Court summed up the findings and conclusions (ii) to (viii) are relevant which read as under.
(ii) An insurer is entitled to raise a defence in a claim petition filed under Section 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 condition e.g. disqualification of the driver or invalid driving licence of the driver, as contained in Sub-section (2)(a)(ii) of Section 149, has 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 the 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 a duly licensed driver or one who was not disqualified to drive at the relevant time.
(iv) Insurance companies, 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) The court cannot lay down any criteria as to how the said burden would be discharged, inasmuch as the same would depend upon the facts and circumstances of each case.
(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 the 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 insurer under Section 149(2) of the Act.
(vii) The question, as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver (a fake one or otherwise), does not fulfil the requirements of law or not will have to be determined in each case.
(viii) If a vehicle at the time of accident was driven by a person having a learner's licence, the insurance companies would be liable to satisfy the decree.
(emphasis supplied)
16. A submission is made on behalf of claimants that unless the insurer proves 'wilful' breach of specific conditions of policy, there is no escape from liability. Section 149(2)(a) of the Act does not employ or use word 'wilful breach'. The phrase used therein is 'breach of a specified condition of the policy'. Is there any scope for reading 'wilful breach' in the said provision? Learned Counsel placed strong reliance on the following paragraph in Divisional Manager, New India Assurance Co., Ltd. v. Tumu Gurava Reddy : 1999(6)ALD256 which reads as under.
A perusal of the above section shows that the insurer can validly defend the proceedings initiated against it on the premise that the owner of the vehicle has committed breach of the condition by entrusting his vehicle to a person who is not duly licensed. This section therefore extends immunity to the Insurance Company if a breach is committed of the condition embodied in the policy. The expression 'breach' is of great significance. The expression 'breach' occurring in Section 149 of the Act means 'infringement or violation of a promise or obligation.' The dictionary meaning of the expression 'breach' is Infringement or violation of a promise or obligation'. The very concept of infringement or violation of the 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 willful infringement or violation. As such, the Insurance Company will have to establish that the injured was guilty of infringement or violation of a promise. The insurer has also to satisfy the Tribunal that such violation or infringement on the part of the insured was willful. If the insured has taken all precautions by appointing a duly licensed driver to drive the vehicle in question the Insurance Company cannot escape its statutory liability. It is only when the insured himself placed the vehicle incharge 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. Unless the insured is at fault and guilty of 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 committed a breach of his promise. The burden is, therefore, upon the insurer to establish that the owner of the vehicle is guilty of willful breach of the condition embodied in the policy. In fact, it is the conspectus of the dicta enunciated by the Apex Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan AIR 1987 SC 1184 which is the leading judgment on the point; Kashiram Yadav v. Oriental Fire and General Insurance Co. : [1989]3SCR811 and Sohan Lal Passi v. P. Sesh Reddy : AIR1996SC2627 , the three classic judgments on the point.
17. While on the point, a reference may be made to United India Insurance Co. Ltd. v. Lehru : [2003]2SCR495 . A two Judge bench considered the question whether the insurer has to prove 'wilful breach of condition' to get out of liability to third parties on the ground that licence was fake. As a matter of fact, the Court observed that the insurer did not even prove that the licence of the driver involved in the accident was fake. Be that as it is, making reference to Skandia Insurance Co. Ltd., (supra) and while holding that in order to avoid liability the insurer must not only show that a person driving at the time of accident was not duly licensed but also the fact that there was breach on the part of the insured. This was further explained as follows:
When an owner is hiring a driver he will therefore have to check whether the driver has a driving licence. 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 the test of the driver. If he finds that the driver is competent to drive the vehicle, he will hire the driver. We find it rather strange that Insurance Companies expect owners to make enquiries with RTO's, which are spread all over the country, whether the driving licence shown to them is valid or not. Thus 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). The Insurance Company would not then be absolved of liability. If it ultimately turns out that the licence was fake the Insurance Company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive.
(emphasis supplied)
18. A three Judge bench in Swaran Singh (1 supra) did not accept the dicta in Lehru (6 supra). It would be clear by reference to paragraphs 92 and 101 as well as already extracted para 110(iii).
It may be true as has been contended on behalf of the petitioner that a fake or forged licence is as good as no licence but the question herein, as noticed hereinbefore, is whether the insurer must prove that the owner was guilty of the wilful breach of the conditions of the insurance policy or the contract of insurance. In Lehru's case (supra) the matter has been considered at some details. We are in general agreement with the approach of the Bench but we intend to point out that the observations made therein must be understood to have been made in the light of the requirements of law in terms whereof the insurer is to establish wilful breach on the part of the insured and not for the purpose of its disentitlement from raising any defence or the owners be absolved from any liability whatsoever. We would be dealing in some details with this aspect of the matter a little later.... The submission of Mr. Salve that in Lehru's case (supra), this Court has, for all intent and purport, taken away the right of insurer to raise a defence that the licence is fake does not appear to be correct. Such defence can certainly be raised but it will be for the insurer to prove that the insured did not take adequate care and caution to verify the genuineness or otherwise of the licence held by the driver.
(emphasis supplied)
Proof of breach of policy conditions
19. Therefore, it is sufficient if it is shown by the insurer that the insured-owner failed to exercise reasonable care in the matter of fulfilling conditions of the policy. How the insurance company can prove that the insured failed to take reasonable care in the matter of fulfilling condition of policy? The negative can be proved by getting evidence from the Licensing Authority. When such initial burden is discharged by insurance company, it is for the owner who stands indemnified under policy of insurance to come forward and give evidence that in his capacity he has taken reasonable care and caution.
20. In motor accident claims cases except in a few instances driver and owner always remain ex parte. Owner who is covered by policy of insurance takes it for granted that in the event of negligence being proved, insurance company would discharge its statutory liability. Even where owner appears and opposes claim petition, it is not done with all seriousness. It is only for insurance company, which has to lead evidence both on the question of negligence and also on question of liability. Insofar as question of negligence or income of deceased/injured is concerned, insurance company seldom has any information except where they appoint an investigator/surveyor to enquire into these aspects. Therefore main defence available to an insurer is as contained in Section 149(2) of the Act. Parliament appears to have recognized this aspect of the matter and made a specific provision containing circumstances under which insurance company can get out of liability and seek exoneration. If the insurance company leads evidence to show that licence found in the vehicle involved in the accident is fake licence or that at the time of accident driver had no licence or valid licence, it would be sufficient proof of breach of condition as per Section 149(2)(a) of the Act.
21. Section 149(2)(a)(ii) of the Act enables insurer to escape from liability under policy of insurance, if it is shown that there has been a breach of specified condition of policy inter alia a condition excluding driving by a named person or by any person who is not qualified. Plainly speaking if insurer shows that there has been a breach of such condition, it would be sufficient for the Tribunal to release insurer from its liability. There is no necessity to warrant a construction to the effect that the insurer should prove wilful breach of specific condition. It amounts to introducing the word 'wilful' in Section 149(2)(a). 1988 Act is an amendment Act and Section 149 except dropping Section 96(2)(a) of 1939 Act found place as it is as Section 149(2) of 1988 Act. Legislature is deemed to be aware of the law as it existed prior to enactment of amendment and repealing Act.
22. It may be noticed that though Supreme Court in Skandia Insurance Co, Ltd., (supra) and Kashiram Yadav (supra) interpreted Section 96 of 1939 Act as requiring the insurer to prove that the insured (owner of vehicle) had done everything in his power to fulfil promise and is not guilty of deliberate breach. While amending, the Parliament did not incorporate the words 'deliberate' or 'wilful'. It can therefore be said that there is no legislative ratification for the interpretation put by Supreme Court on Section 96 of 1939 Act. That being the position, any interpretation of Section 149(2)(a) of the Act as requiring proof of wilful breach of specific condition of policy would amount to supplying causus omissus, which has to be avoided. As already noticed Swaran Singh (1 supra) did not accept Lehru (supra). For these reasons, it must be held that if the insurer proves that owner of the vehicle failed to exercise reasonable care and was guilty of negligence in the matter of fulfilling conditions (promises) of policy of insurance regarding use of vehicle by duly licensed driver, indemnity under policy cannot be enforced against the insurer.
23. A contract of insurance as pointed out supra is akin to contract of indemnity. Parties to a policy of insurance are bound by mutual obligations and promises, the underlying aspect being that one party believes that other party would keep up his promises. When one party (owner of vehicle) fails to fulfil promise of entrusting the insured vehicle only to a person having valid driving licence and it is found (due to effort of insurer) that the vehicle was used at the relevant time by a person not having valid driving licence or a person having a fake driving licence or a person having invalid driving licence, the law can always infer that such thing happened with connivance of insured. It would be altogether different case if it is proved by owner of vehicle that he entrusted the vehicle to a person having valid driving licence but without his knowledge vehicle was driven by another person (see for instance Premkumari v. Prahlad Dev : AIR2008SC1073 . Therefore if insurer proves that driver was having fake licence, it would discharge its onus and it is for owner as well as claimants seeking compensation from owner to prove otherwise. Motor Vehicles Act being beneficiary legislation, claimants may not be aware of these aspects. In such cases, it is incumbent on the part of owner to come forward and adduce evidence that he has taken all reasonable care and that he was not negligent by way of rebuttal evidence. When owner even after receiving notice from the Tribunal does not appear and lead evidence, adverse inference can be drawn and insurer cannot be blamed.
24. In United India Insurance Company Limited v. Rakesh Kumar Arora : AIR2009SC24 , Supreme Court made the following observations..The vehicle in question admittedly was being driven by Karan Arora who was aged about fifteen years. The Tribunal, as noticed hereinbefore, in our opinion, rightly held that Karan Arora did not hold any valid licence on the date of accident, namely 5.2.1997.... The learned single Judge as also the Division Bench of the High Court did not put unto themselves a correct question of law. They proceeded on a wrong premise that it was for the Insurance Company to prove breach of conditions of the contract of insurance.... The High Court did not advert to itself the provisions of Sections 4 and 5 of the Motor Vehicles Act and thus misdirected itself in law.... This aspect of the matter has been considered by this Court in Oriental Insurance Co. Ltd. v. Prithvi Raj : AIR2008SC1408 wherein upon taking into consideration a large number of decisions, it was held that the Insurance Company was not liable, stating:In the instant case, the State Commission has categorically found that the evidence on record clearly established that the licensing authority had not issued any license, as was claimed by the Driver and the respondent. The evidence of Shri A.V.V. Rajan, Junior Assistant of the Office of the Jt. Commissioner & Secretary, RTA Hyderabad who produced the official records clearly established that no driving license was issued to Shri Ravinder Kumar or Ravinder Singh in order to enable and legally permit him to drive a motor vehicle. There was no cross examination of the said witness. The National Commission also found that there was no defect in the finding recorded by the State Commission in this regard.
Evidence on record
25. In the O.P. filed by claimants driver of offending vehicle was not arrayed as party respondent. It is however mentioned that when the accident occurred on 16.4.1997 and Koteswari died, the same was reported to P.S. Ponnuru (Rural) by Government Hospital authorities, that a case being Crime No 44 of 1997 was registered under Section 337 of Indian Penal Code, 1860, against driver of lorry. Ex.B2 driving licence was marked. The same bearing DL No. 2432/VJA/83 was issued to one Ijack, s/o. James, r/o Krishna Lanka, Vijayawada. In the charge sheet (Ex.A2), Ijack was shown as sole accused. Therefore, initially the burden was on the insurer to show that Ijack was not having a licence or he was having a fake licence. To prove the same, insurer examined R.W.1 and R.W.3. The former is a Senior Assistant in the office of Deputy Transport Commissioner, Vijayawada. He deposed that DL No. 2432/VJA/83 stood in the name of P. Rama Krishna, s/o. Gopaiah, r/o. Governorpet, Vijayawada, and that Ijack was not holder of DL No. 2432/VJA/83. He also opined that said driving licence is a fake licence. R.W.3 is a constable working at relevant time in P.S. Ponnuru (Rural). He deposed that at the time of accident, documents including DL No. 2432/VJA/83 i were seized from the lorry. From this evidence, there cannot be any doubt that original of Ex.B2 driving licence was issued to P. Rama Krishna and it was never issued to Ijack. From this, it follows that Ijack was driving vehicle with a fake licence. There is certainly a clear breach of a specified condition of the policy as referred to in Section 149(2)(a)(ii) of the Act. In the opinion of this Court, the insurer has discharged the burden. It is the insurer who indemnifies insured from any liability incurred by such owner when vehicle is involved in accident causing death or injury. Therefore the owner has to come forward and rebut the evidence. In this case owner remained ex parte and therefore an adverse inference has to be drawn against owner. The owner of offending vehicle would have been the best witness to speak about circumstances under which Ijack came to drive vehicle with a fake licence.
26. In view of the foregoing discussion regarding legal principles and finding of facts appeal has to be allowed. However, compensation if any paid to respondents 1 to 4 after passing of impugned award or during pendency of appeal shall not be recovered from them. It shall be open to appellant to recover the same from owner of offending vehicle.
27. Subject to the above observations, the civil miscellaneous appeal is allowed. No costs.