Libra Bus Service (P) Ltd. vs Pushpa Devi and Others

Mahesh Grover, J.—The appellant, Libra Bus Service (P) Ltd., the owner of the bus bearing registration No. PB-13C-4667 which was involved in a motor vehicular accident occurred on 12.9.1998 causing death of one Raj Kumar filed an appeal against common award dated 1.3.2002 passed by the Motor Accident Claims Tribunal, Sangrur (for short, ''the Tribunal'') in M.A.C. Case Nos. 72 of 25.11.1998 and 101 of 22.10.1989.

On 7.9.2005, a learned single judge of this Court passed the following order in the appeal:

Counsel for both the parties are agreed that so far as claimants are concerned, qua them order passed regarding payment of compensation be deemed to have been become final and be not disturbed to that extent. Appellant filed this appeal against award dated 1.3.2002 by the Motor Accident Claims Tribunal Sangrur (in short ''the Tribunal'') vide which compensation amount of Rs. 2,56,000/- was granted in favour of respondent Nos. 1 to 5, on account of death of Raj Kumar. The Tribunal, by giving finding that the driver employed by the appellant was not having a valid driving licence, has fastened liability upon the appellant. It has been ordered that amount be first paid by the Insurance Company and then the Company be at liberty to recover the same from the owner/appellant.

Counsel for the appellant states that on a very sketchy evidence led by Insurance Company, a finding has been given that respondent No. 6 was not possessing a valid driving licence when accident had taken place. By referring to ratio of judgment in United India Insurance Company Ltd. Vs. Lehru and Others, , counsel states that it was incumbent upon Insurance Company, to prove further that the insured was guilty of willful breach of conditions of Insurance Policy. Counsel further states that to the same effect is ratio of judgment in National Insurance Co. Ltd. Vs. Swaran Singh and Others, .

Confronting with this situation Shri Pabbi, very fairly states that matter requires re-consideration by the Tribunal.

Keeping in view facts and circumstances of this case, and also ratio of judgments, referred to above, this appeal is allowed, award qua the claimants is maintained, however, to decide as to who is responsible for making the payment, matter is remitted to the Tribunal, to decide it afresh on the point as to whether the insured has committed any willful breach of conditions of insurance policy or not.

Parties are directed to appear before the Tribunal on 3.10.2005. The Tribunal need not to issue any notice of pending litigation to the claimants.

Thereafter the Tribunal disposed of the matter on 18.9.2006 and re-determined the issue which was entrusted to it regarding the insured (appellant) having committed willful breach of conditions of insurance policy.

In its order dated 18.9.2006, the Tribunal came to the conclusion that the appellant had produced fake documents Exhibits C-l and C-2 as also the entries of the register were fabricated. The driving licence was also held to be fake and it was held that the appellant had committed a willful breach of the insurance policy. Paragraphs 15 and 16 of the above order are reproduced below:

Thus, taking into consideration the fact that the owner of the bus produced fake documents Exs.C-1 and C-2 on the file as well as the entry in the register shows that something has been removed from the top of the entry which is meant for pasting of photograph and address of respondent No. 1 is not the same as find mention in the entry as well as it is not the case of respondent No. 1 that he got ever issued the driving licence from Allahabad, it cannot be said from these documents as well as from the report Ex.R4/A which was prepared from the entries in the register, the respondent No. 1 was holding a valid driving licence. As stated, when the insured i.e. Respondent No. 2 is guilty of producing fake documents in the court, the onus placed on the insurer that the insured was guilty of negligence and failed to exercise due care at the time of employing the driver, stands discharged.

As such the insured has committed a willful breach of the conditions of the Insurance Policy i.e. Employing the driver having no driving licence and has not taken reasonable care at the time of employing the driver, and, as such, is liable to make the payment to the Insurance Company.

By filing CM. No. 25313-13-CII of 2006, the appellant has now sought to place on record its objections against the above reproduced findings recorded by the Tribunal.

Learned Counsel for the appellant referred to the testimony of the Manager, who had also tendered an affidavit to say that the licence produced by the driver had been verified at the time of employment and that the same had been issued by the authorities at Allahabad. He further contended that this licence, which had been issued from Allahabad has not been denied by Khalid Hussain, who appeared as a witness to testify to the correctness of the licence. He admitted that letter dated 8.5.2006 Ex.R-4, original of which is Ex.R4/A and also admitted to entry in register Ex.R-3 as correct and a perusal thereof shows that Sukhjit Singh was having a valid driving licence, but the dispute is that Sukhjit Singh submitted that he got his licence from Licensing Authority, Fatehgarh Sahib whereas the licence was issued by the Licensing Authority, Allahabad.

I have considered the objections raised by the appellant and have perused the record.

The matter was initially remitted back primarily on the question to be determined which was as to whether the insured, i.e. the appellant has committed any willful breach of conditions of insurance or not.

In Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan and Ors. (1987)91 P.L.R. 665 (S.C.) : 1987 A.C.J. 411 (S.C.), the Supreme Court in paragraphs 12 and 14 of the judgment observed as under:

The defence built on the exclusion clause cannot succeed for three reasons, viz.

(1) on a true interpretation of the relevant clause which interpretation is at peace with the conscience of Section 96, the condition excluding driving by a person not duly licensed is not absolute and the promisor is absolved once it is shown that he has done everything in his power to keep, honour and fulfill the promise and he himself is not guilty of a deliberate breach.

(2) Even if it is treated as an absolute promise, there is substantial compliance therewith upon an express or implied mandate being given to the licensed driver not to allow the vehicle to be left unattended so that it happens to be driven by an unlicenced driver.

(3) The exclusion clause has to be ''read down'' in order that it is not at war with the ''main purpose'' of the provisions enacted for the protection of victims of accidents so that the petitioner is exculpated when he does everything in his power to keep the promise.

...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 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 violation of the promise on the part of the insured that the insurer can hide under the umbrella of the exclusion clause....

In United India Insurance Company Ltd. Vs. Lehru and Others, , a two Judges Bench of the Supreme Court, while expressing agreement with the law laid down in Skandia''s case (supra) and other judgments held as under:

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. 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.

In National Insurance Co. Ltd. Vs. Swaran Singh and Others, , the Apex Court has observed that merely because the driving licence is fake or invalid, it will not make any difference as it has to be established that this factor had contributed to the accident.

In the light of the above reproduced law laid down by the Supreme Court, I proceed to examine the findings recorded by the Tribunal on the question that was remitted to it for decision.

A perusal of the objections submitted by the appellant shows that an affidavit of its Manager was tendered before the Tribunal to state that at the time of offering employment to the driver of the offending vehicle, his licence had been verified, which was issued by the Regional Transport Authority, Allahabad. The Tribunal got recorded the statement of an official of that authority, namely, Khalid Hussain through a Local Commissioner in which he did not dispute the said fact and the entry as it appeared in the register, which is Exhibit R-3 (Ex-RW4B) and the same shows that Sukhjit Singh, the driver of the offending vehicle, was having a valid driving licence from Allahabad. It was this licence which was checked by the manager of the appellant-company while offering employment to said Sukhjit Singh.

Therefore, in view of the law laid down by the Supreme Court in the above mentioned cases, the appellant had not committed any willful breach of the insurance policy as due care was taken by it while employing the driver of the offending vehicle.

Consequently, CM. Nos. 25312-13 of 2006 is allowed, the objections filed by the appellant are taken on record and are accepted, order dated 18.9.2006 of the Tribunal is set aside and it is held that the liability to pay the compensation awarded to the claimants shall be that of the insurance company.

This order will be read as part and parcel of order dated 7.9.2005 passed by this Court.

The appeal is disposed of in above terms.