Oriental Insurance Company vs Gurdeep Singh and Ors.

This petition is directed against the judgment of the State Conusmer Protection Commission Jammu dated 19.3.2001 and that of the Divisional

Forum dated 30.6.2000, whereby the claim petition filed by respondent No. 1 has been allowed and an amount of Rs. 1,55,994/awarded in his

favour with interest at the rate of 12% p.a.

Admitted facts are that respondent No. 1 secured an Insurance Policy with respect to a Bus bearing registration No. JK02D2079 on 1.3.1995,

which was operative upto 28.2.1996. The said Vehicle met with an accident on 10.1.1996 resulting in death of 8 persons and injury to 45

persons. The bus also suffered heavy damage in the accident. A claim was lodged by respondent No. 1 with the petitioner Insurance Company.

The Insurance Company appointed Surveyor to assess the loss which was assessed at Rs. 1,55,992. With a view to verify the driving licence of

the driver Sudershan Kumar S/o. Sh. Shiv Lal R/o. Sudh Mahadev a private Investigator namely, Kartar Singh Multani, was deputed who carried

out investigation and reported that the driving licence said to be issued by the Licensing Authority, Nahan [Himachal Pradesh] was fake. A

certificate is also said to have been proceured from the licensing Authority that no such licence was ever issued. Based upon the report of

Investigator, the Insurance Company repudiated the claim vide its letter dated 8.5.1997. The owner i.e. respondent No. 1 lodged a Complaint

with the Divisional Consumer Forum alleging deficiency in service. The Insurance Co. raised the defence of fake driving licence possessed by the

driver who was driving the vehicle at the time of accident. During the proceedings before the Divisional forum besides the affidavit of the Manager

of the Insurance Company R.K. Dhuppar, the petitioner insurance Company filed affidavit of Kartar Singh Multani, Investigator. However, the

Insurance Company failed to produce the Investigator for the purposes of cross examination despite opportunities given. The Survey report was

also produced before the Divisional Forum.

Respondent No. 1 took a specific plea before the Divisional Consumer Forum that he had taken all care and caution before engaging Sudershan

Kumar as the driver and on verification it was found that his driving licence for Heavy Transport Vehicles was renewed upto 28.2.1997 and there

was also an endorsement for driving Public Service Vehicles and he had no doubt about the genuineness of the licence. On the basis of the

evidence led .by the parties, the Divisional Forum allowed the complaint and awarded an amount of Rs. 1,55,992 alongwith interest at the rate of

12% p.a. to be compounded annually w.e.f. 19.1996 i.e. two months of the filing of the report by the Surveyor and also awarded Rs. 2000/ as

cost of the litigation. The Divisional Forum was satisfied with the explanation of respondent No. 1 that he took all care and caution while engaging

the driver and thus there was no breach of contract of insurance. The Divisional Forum also returned a finding that the accident was caused due to

Mechanical failure and not on account of lack of skill of the driver or his negligence and therefore, rejected the defence of the Insurance Company.

2] Against the judgment and award of the Divisional Forum dated 30.6.2000, an appeal was preferred before the State Commission. Appeal

came to be dismissed vide judgment dated 19.3.2001. The appellate authority concurred with the findings of the Divisional Forum and relying upon

the judgment of the Apex Court in Skandia Insurance Co. Ltd. Kolilaber Chandravandan and Others. AIR 1987 SC 11.84, held that unless there

is a wilful breach of the contract the Insurance Company can not be absolved of its liability of compensating the insured, even if the licence is held

to the fake.

3] Mr. Jugal Kishore, Learned counsel appearing for the petitioner has vehemently argued that the findings of both the courts are contrary of law.

The Insurance Company having successfully established that the driving Licence was fake, can not be fastened with the liability of paying the claim

to respondent No. 1 in respect to damage caused to the vehicle though he admitted that so far as the liability of the third party is concerned, the

Insurance Company has a statutory liability. It is argued that the event of breach of contrast of Insurance, the Insured is not entitled to any claim.

Reliance is placed upon the judgment of the Apex court reported as 2002 SCW 2811. He has also referred to the Insurance Policy AnnexureA,

particularly the drivers clause to argue that there has been a breach of the Insurance Policy and thus the Company is not liable.

4] The contesting respondent No. 1 represented by Mr. Raghu Mehta has referred to the findings of fact arrived at by the Divisional Forum. The

Fourm has specifically held that the Insurance Company has failed to establish that the Licence was fake though the affidavit of Kartar Singh

Multani was filed before the forum, but he was not produced thereafter for crossexamination, despite the last opportunity and hence the said

affidavit is not admissible in evidence and no reliance could be placed on that. The forum has also held that no other record including the record

from the Licensing Authority was summoned or proved to establish the genuineness of the driving license of the driver. It is accordingly submitted

that both the Courts below have rightly awarded the claim.

5] I have heard the Learned counsel for the petitioner and gone through the record on the file.

6] The relevant clause of the Insurance Policy which require a valid driving licence to be possessed by a driver, reads as under:

Drivers Persons or classes of persons entitled to drive any of the following.

A] The insured

B] Any other person who is driving on the insured's order or with his permission.

7] Provided that the person driving holds or had held and has not been disqualified from holding an effective driving licence with all the required

endorsments thereon as per the Motor Vehicle Act and the Rules made thereunder for the time being in force to drive the category of Motor

Vehicle Insured hereunder

Section 3 of the Motor Vehicle Act prohibits driving of a Motor vehicle in any public place by any person unless he holds and effective driving

licence authorizing him to drive the vehicle. Section 4 prescribes the age limit in connection with driving of motor vehicle and section 5 imposes an

obligation upon the owner or the Incharge of the vehicle not to permit driving of a motor vehicle by any person in contravention of Section 3 and 4

of the Act. Section 9 of the Motor Vehicles Act prescribe procedure, qualifications and disqualifications for grant of Driving licence. Section 10 of

the Act specify various kinds of licences required for driving different type of Vehicles. Section 11 of the Act entitle a licence holder to seek

additions in the driving licence for driving some other class or description of motor vehicle not earlier specified in the licence. For making such

additions, some procedure is to be applied as is prescribed for grant of licence for the first time as laid down under Section 9 of the Act.

8]. Based upon the provisions of Section 11, it is contended on behalf of the respondents that even if it is assumed that Original licence was fake,

the additions granted in the licence by the Licensing Authority at Jammu have to be considered as valid as the same was made after following the

procedure for grant of licence as prescribed under Section 9 of the Act. Therefore, the endorsment itself is to be taken as a valid driving license to

drive that particular type of vehicle. Under the endorsement, the driver was entitled to drive the Vehicle that met with accident.

9]. Both the forums below have returned a specific finding that the accident was caused due to mechanical failure. This finding has not been

assailed in the present proceedings. The State Commission has relied upon a judgment of the Apex Court in case Skandia Insurance Co. Ltd. v.

Kokilaben Chandravandan & Ors. AIR 1987 SC 1184 wherein the Apex court held that the breach of the insurance policy must be established to

be wilful to claim immunity by the insurance co. Simlar view has been taken by the Apex court in case United India Insurance Co. Ltd. v. Lehru

and Ors., AIR 2003 SC 1292.

10]. As noticed above, the accident was caused due to mechanical defect and not attributable to either skill of the driver or the negligence on his

part. The Apex Court in Jatinder Kumar v. Ins. Co. Ltd. & Ors. AIR 2003 SC 4161 held as under:

So far as the facts of this case are concerned, there is hardly any dispute, therefore, we can safely proceed on the basis that the vehicle in question

was damaged due to a mechanical fault and no fault of the driver. For the purpose of argument, we may proceed on the basis that the driver of the

Car did not have a valid driving Licence. Question then is can the Insurance Company repudiate a claim made by the owner of the vehicle which is

duly insured with the Company, solely on the ground the driver of the vehicle who had nothing to do with the accident did not hold a valid licence?

Answer to this question in our opinion, should be in the negative. Section 149 of the Motor Vehicle Act, 1988 on which reliance was placed by the

State Commission, in our opinion, does not come in the aid of the Insurance Company in repudiating a claim where driver of the Vehicle had not

contributed in any manner to the accident. Section 149[2] [a] [ii] of the Motor Vehicles Act empowers the Insurance Company to repudiate a

claim wherein the vehicle in question is damaged due to an accident to which driver of the vehicle who does not hold a valid driving license is

responsible in any manner. It does not empower the Insurance Company to repudiate a claim for damages which has occurred due to acts to

which the driver has not in any manner, contributed i.e. damages incurred due to reasons other than the driver.

11]. The Apex Court in case National Insurance Co. v. Swaran Singh & Ors., AIR 2004 SC 1531 also held that the burden to establish breach is

upon the Insurance Company. It has also been noticed in the aforesaid judgment that the Insurance Company can not be permitted to avoid its

liability under the contract on the ground of fake licence unless the breach is established to be wilful and fundamental in nature. What has been held

in the aforesaid judgment is noticed below.

We have analysed the relevant provisions of the said Act in terms whereof a motor vehicle must be driven by a person having a driving

licence. The owner of a motor vehicle in terms of Section 5 of the Act has a responsibility to see that no vehicle is driven except by a person who

does not satisfy the provisions of Section 3 or 4 of the Act. In a case, therefore, where the driver of the vehicle admittedly did not hold any licence

and the same was allowed consciously to be driven by the owner of the vehicle by such person, the insurer is entitled to succeed in its defence and

avoid liability. The matter, however, may be different where disputed question of fact arises as to whether the driver had a valid licence or where

the owner of the vehicle committed a breach of the terms of the contract of insurance as also the provisions of the Act by consciously allowing any

person to drive a vehicle who did not have a valid driving licence. In a given case, the driver of the vehicle may not have any hand at all e.g. a case

where an accident takes place owning to a mechanical fault or vis major.

[105Jx x xxx

ii] The breach of policy condition e.g. disqualification of driver of 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 licence 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 vehicle by duly licenced driver or one who was not

disqualified to drive at the relevant time.

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 qualifications to driver during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the

aid 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. 12] From the law laid down by the Apex Court in various judgments noticed

hereinabove, the repudiation of the contract by the Insurance Company was not justified. It has further been held that the ground of driving of

vehicle on the basis of fake licence is not one of the permissible defences available to the Insurance Company under Section 149 of the Motor

Vehicles Act. There is no escape for the Insurance Company but to burden the liability arising out of the Insurance contract. I do not find any

infirmity, factual or legal in the orders impugned in the writ petition. This petition accordingly fails and is dismissed.