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Judgment
Heard finally.
By this appeal under Section 173(1) of Motor Vehicles Act the insurance company has challenged the award dated 22/2/2017 passed by Xth
Additional Member, Motor Accident Claims Tribunal Indore in claim case No. 665/16 awarding compensation of Rs. 4,77,200/- to respondent no. 1
and exonerating the insurance company but passing an order of pay and recover.
The respondent no.1 had filed the claim petition taking the plea that he was sitting as driver in truck MP 09-KB- 8721 which was standing by the side
of the road infront of Jaiswal Dhaba at Sanawad Road and the offending truck No. MP 07-HB-0969 driven by respondent no. 3 in rash and negligent
manner came from the side of Daudwa and had caused the accident as a result of which truck of respondent no. 1 fell down in a ditch and in the
accident cleaner had died on the spot and respondent no. 1 had received grievous injuries on account of which he had become partially disabled. Â
The claim was opposed by respondents no. 2 & 3 on the ground that owner and the insurance company of truck No MP 09KB- 8721 were not
impleaded therefore, the claim was liable to be rejected on that ground. The appellant had also filed reply and opposed the claim petition raising the
plea that respondent no. 3 was not having valid and effective license at the time of accident.
Earlier the award dated 22/12/2010 was passed by the tribunal holding that the accident was caused due to the rash and negligent driving of truck no.
MP 07-HB-0969 by the respondent no.3 in which respondent no. 1 had received grievous injury and suffered permanent partial disability. The tribunal
further found that there was a violation of policy condition and accordingly passed the award of Rs. 4,77,200/- in favour of respondent no. 1 holding
the respondents no. 2 & 3 liable to pay the amount. In M.A. No. 763/2011 at the instance of respondent no. 1 and connected appeal this court by
order dated 15/3/2013 had directed the claims tribunal to decide the issue of liability of appellant, respondents no.2 & 3 afresh. Thereafter the claims
tribunal has passed the award dated 22/2/2017 exonerating the insurance company and holding respondents no. 2 & 3 liable with a direction to
insurance company to pay the compensation amount and recover it from respondents no. 2 & 3.
Having heard the learned counsel for the parties and on perusal of the record it is noticed that so far as the challenge raised by insurance company in
respect to direction of claims tribunal to pay and recover, the said challenge does not survive because in pursuance to the award of the claims tribunal,
insurance company has deposited the entire amount and same has been undisputedly disbursed to respondent no. 1 claimant.
The respondent no. 2 has filed the cross objection challenging the finding of the tribunal in respect of exoneration of appellant/insurance company.
Counsel for appellant has raised an objection about maintainability of the cross objection on the ground that alongwith the cross objection respondent
no. 2 has not paid sum of Rs. 25,000/- as required by proviso to Section 173(1) of Motor Vehicles Act.
Such an objection cannot be sustained since it has been pointed out by counsel for respondent no. 2 that in the earlier round of litigation alongwith the
appeal respondent no. 2 had deposited Rs. 25,000/- and in pursuance to the remand order of this court dated 15/3/13 again respondent no. 2 has
deposited Rs. 2,00,000/-. Hence there is sufficient compliance of requirement of proviso to Section 173(1)of the Act. Thus the objection of appellant is
rejected and cross objection is held to be maintainable.
On merit the main issue is in respect of sustainability of the award of the tribunal in respect of exoneration of appellant insurance company.
The impugned award reveals that the tribunal has exonerated the insurance company on the ground that in the arrest memo and challan Ex.P-1 name
of driver of the vehicle is disclosed as Deepak son of Bhuvan Singh Bhilala R/o Village Pipalikheda Chouki Badiyasanavad and that no driving license
was seized whereas in the claim case the driving license Ex.P-80(copy as Ex.D-2) was of Deepak Kushwaha son of Bhan Singh R/o Pipaljhopa
District Khargone and that driver Deepak was illiterate and driving license is not issued to illiterate person. Since the tribunal has noted the
discrepancy in the name of driver disclosed in the criminal prosecution paper and the name of driver in Ex.P-80 therefore, it has held that driving
license Ex.P-80 was not the driving license of respondent no. 3 Deepak and accordingly it has held that at the time of accident respondent no. 3 was
not having any valid and effective driving license and accordingly exonerated the insurance company.
On the perusal of the evidence on record it is found that the tribunal while recording the above finding has not taken into account the material
evidence. The respondent no. 3 had produced before the tribunal his original driving license MP10D-2007-0058065, Ex.P80. He had clarified that his
cast is Bhilala and surname is Kushwaha and that the discrepancy in respect of name of the village and his father in the driving license occurred on
account of the mistake of computer operator.
Hariom Shivhare the power of attorney holder of respondent no. 2 owner of the vehicle has stated that Deepak son of Bhan Singh and Deepak son of
Bhuvan Singh are one and same person and surname is used interchangeably. He has also stated that recruitment of the driver in respondent no. 2 is
done either by owner of respondent no.2 Karan Singh or by Hariom Shivhare himself and before recruitment of the driver the trial is taken and driving
license is examined and this process was followed while recruiting respondent no. 3. He has stated that driving license Ex.D-2 Â (Ex.P80) bears the
photograph of respondent no. 3 and while employing respondent no. 3, a photocopy of driving license was kept. He has also stated that he had
occasioned to visit the house of Deepak Kushwaha and he knows his father also whose name was Bhuvaan Singh and that Bhuvaan Singh and Bhan
Singh are the same person.
NAW-2 Om Prakash Mishra the investigating officer in the criminal case and SHO of Police Station Bediyachouki has stated that the name of
respondent no. 3 was mentioned Bhuvaan Singh at the disclosure of respondent no. 3. He also stated that the person whose photograph exists in
driving license Ex.P-80 was arrested and that Deepak Son of Bhan Singh as mentioned in driving license Ex.P-80 and Deepak son of Bhuvaan Singh
as mentioned in arrest memo Ex.D-1 are same person.
From the aforesaid evidence it is clear that though there was discrepancy in respect of spellings of name of father of driver in the driving license
Ex.P-80 and the arrest memo Ex.P-1 but said discrepancy has sufficiently been explained and it has come on record that same person was arrested
by police whose photograph is affixed in driving license Ex.P-80 and that very person was employed by respondent no. 2. Hence the finding of tribunal
that the driver of the vehicle was not holding valid and effective at the time of accident cannot be sustained.
For a moment, even if the finding of the tribunal that driver of the vehicle was not having the valid driving license at the time of accident is upheld then
also the insurance company cannot be exonerated in view of the statement of Hariom Shivhare who was also entrusted with responsibility for
recruitment of the driver in respondent no. 2 and who has stated that driver was recruited after driving test and scrutiny of the document. Hence his
statement reflects that due care and caution was taken before employing respondent no. 3 as driver of the vehicle.
As against this no evidence has been produced by appellant insurance company to show that the owner of the vehicle had not taken due care at the
time of engaging the driver and had permitting him to drive the offending vehicle inspite of the knowledge that driver was having the fake license.
This court in the matter of Rajmal son of Mishrilal Jain Vs. Sanjay son of Prakashchandra and others reported in 2010(4) MPLJ 573 taking note of the
legal position in this regard has held as under:
[09] In the case of a fake licence, the Insurance â€" Company in order to avoid its liability is required to prove that driver was not duly licenced and
the owner insured was aware or had noticed that the licence was fake still permitted that person to drive the vehicle. The insurer has to satisfy the
Tribunal that infringement on the part of the insured was will ful. If the insurer had taken all the precaution by appointing a licenced driver to drive the
vehicle and it is established that it was not the insured, who had allowed the vehicle to be driven by a person not duly licenced, then the Insurance
Company cannot repudiate its statutory liability. It is also worth noting that when at the time of employment, the driver produces a licence, which on
the face it look genuine, then the owner is not expected to make an enquiry from the RTO as to whether the licence was infact issued by the
competent authority or not.
[10] The Supreme Court in the matter of United India Insurance Co. Ltd. V/s. Lehru and Others reported in 2003 ACJ 611 has held that:-
“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's case, 1996 ACJ 1044 (SC), 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 than 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.
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 R.T.O'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 its 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. More importantly even in such a case the insurance company would remain liable to the innocent third
party, but it may be able to recover from the insured. This is the law which has been laid down in Skandia's case, 1987 ACJ 411 (SC); Sohan Lal
Passi's case, 1996 ACJ 1044 (SC) and Kamla's case, 2001 ACJ 843 (SC). We are in full agreement with the views expressed therein and see no
reason to take a different view.â€
[11] The Supreme Court in the matter of Lal Chand V/s. Oriental Insurance Co. Ltd. reported in 2006 ACJ 2161, has considered the case of fake
licence where the driving licence of the driver of the offending truck was not issued by the licencing authority, but the owner had seen and examining
the licence produced by the driver, took his driving test and found that the driver was competent to drive the vehicle and thereafter appointed him as
driver. The Court observed that the Insurance Company cannot be absolve by holding that :-
“8. We have perused the pleading and the order 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 Co. Ltd. V. Lehru, 2003 ACJ 611 (SC), in para 17 has observed that where the owner is 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, 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 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
had satisfied himself that the driver had a licence and was 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.â€
[12] The similar issue came up before this Court in the matter of Ramesh Singh Vs. Subhash Singh and others reported in 2009 ACJ 1510 where this
court has taken note of the earlier judgments on the point of the liability in case of use of fake licence by the driver without the knowledge of the
owner by holding that :-
“20. The Division Bench of this court in the case of Sunia Bai V. Rammu Patel, 2007, ACJ 2640 (MP), has held that there is no evidence on
record to show that the owner had the knowledge that the licence held by the driver was forged. The licence was renewed is not in dispute. In
absence of such evidence, it cannot be said that there was breach of condition of the policy on the part of the owner. The owner is not supposed to
make inquiry with respect to genuineness and validity of licence held by the driver in various R.T.Os. in India from where the licence could have been
issued to the driver. Hence, it cannot be said to be substantial breach on the part of the owner, as such, the insurer cannot escape from the liability to
make payment of compensation and held that the driver, owner and insurer are liable jointly and severally to make the payment of compensation.
The Apex Court in the case of Lal Chand V. Oriental Insurance Co. Ltd., 2006 ACJ 2161 (SC), no evidence led by insurance company to show
that due and adequate care was taken by owner or, owner had knowledge that driver was not holding a valid driving licence and held that the
insurance company is liable to pay compensation.
In the case of Radhabai V. H.K. Siddiqui, 2007 ACJ 991 (MP), the Tribunal on the basis of evidence of R.T.O. held that driving licence produced
by the driver was fake and exonerated the insurance company. The Division Bench of this court has held that there was violation of the conditions of
policy due to fake licence. It was also held that the insurance company would be liable to pay the amount, but it would be able to recover from the
insured as per the law laid down by the Apex Court in the case of United India Insurance Co. Ltd. Vs. Lehru, 2003 ACJ 611 (SC); National
Insurance Co. Ltd. V. Swaran Singh, 2004 ACJ 1 (SC) and National Insurance Co. Ltd. V. Baljit Kaur, 2004 ACJ 428 (SC).
In the case of Patiraj Singh V. National Insurance Co. Ltd., 2007 ACJ 944 (MP), the Division Bench of this Court has held that in the absence of
the finding recorded by the Claims Tribunal that the licence held by the driver was forged to the knowledge of the owner, the insurer cannot escape
from the liability to pay compensation. Similar view is taken by the Division Bench of Indore Bench in the case of Dr. Pramodchandra V. Ashwani
Arora, 2007 ACJ 959 (MP). The Division Bench of this Court further in the case of Prahalad Rai V. Shashi Kori, 2007 ACJ 2575 (MP), has held that
the owner had verified the licence and on prima facie scrutiny found it to be correct and there was nothing to show that it was interpolated and not a
genuine one and held that the insurance company is liable to pay the amount of compensation.
In the case of National Insurance Co. Ltd. V. Swaran Singh, 2004 ACJ 1 (SC), it is held that the insurance company is liable to indemnify the
insured and in the event of finding breach of policy only, recover the amount of compensation from the owner of the vehicle. It is further held that the
driver of the vehicle was having valid licence was within the knowledge of the owner of the vehicle. In the case of National Insurance Co. Ltd. V
Kanti Devi, 2005 ACJ 1544 (SC), it is held that once defence is taken by the insurance company that the licence was fake or the driver did not have
requisite driving licence to drive particular type of vehicle then it will be for insurer to prove that the insured did not take adequate care and caution to
verify the genuineness or otherwise of licence held by the driver. The effect of evidence in this regard has to be considered by the concerned
Tribunal. However, in this case, there is no evidence led by the insurance company that the insured did not take adequate care and caution to verify
genuineness or otherwise of licence held by the driver. Even in the written statement filed before the Claims Tribunal, the insurance company has not
raised the objection that the insured has not taken steps to verify genuineness or otherwise of the driving licence. Insurance Company has pleaded that
the driver of the vehicle was not having valid licence, therefore, insurance company is not liable to indemnify insured. Mere finding that driver of the
vehicle was not having valid licence will not absolve the insurance company from its liability and insurance company is liable to indemnify the insured.
In view of the aforesaid various decisions of the Division Bench of this High Court as well as the dictum of the Apex Court, I hold that even if the
driver was having forged licence, then also insurance company is liable to indemnify the insured. Hence, the exoneration of the insurer by the Tribunal
is neither presentable or invulnerable. Thus, it is held that the owner, driver and insurer are liable jointly and severally to make the payment of
compensation.
[13] This court in the matter of National Insurance Company Ltd. Vs. Vidhyabai and Others reported in 2009 (II) MPWN 62 has relying upon the
earlier judgment of the Supreme Court held that the Insurance - Company in support of its defence of breach of policy condition is to prove breach
was will ful on the part of the insured and without such proof the insurer cannot repudiate its liability.
[14] From the aforesaid judgments, it is clear that it is not enough for the Insurance â€" Company to establish that the driver of the offending vehicle
was having a fake licence, but in order to repudiate its liability, the Insurance â€" Company is required to establish that the owner of the vehicle had
not taken due care at the time of engaging the driver and had permitted the driver to drive the offending vehicle inspite of the knowledge that the
driver was having the fake licence. The owner of the vehicle is not expected to make enquiry from the R.T.O in respect of the genuineness of the
licence.
Having regard to the aforesaid factual and legal position, I am of the opinion that the tribunal has committed an error  in exonerating the insurance
company, therefore, the award of the tribunal to that extent is set aside. Accordingly cross objection of respondent no. 2 is allowed and appeal filed by
insurance company is dismissed.
C.C. as per rules.