United India Insurance Co. Ltd. vs Rajvinder Kaur and others

K. Kannan, J.—The insurance company challenges the award on the issue of liability on the ground that at the relevant time of the accident, the vehicle had been sold and subsequent purchaser had not informed the insurance company. Consequently, the insurer is not liable, being policy of contract and a contract cannot be available to a stranger to a contract to enforce the terms. This defence is not even academic, for, it is squarely covered through a statutory protection given to a third party through the enactment of section 157 which makes the insurer liable by a deemed transfer although the transfer itself had not been informed by the subsequent purchaser or his insurer.

It is further contended that the licence was fake and was found to be so although subsequently renewed by production of evidence of a clerk of the licensing authority. However, in this case, although the driver remained ex parte, the owner of the vehicle had filed a statement and given also evidence to the effect that he inspected the driving licence at the time when he engaged the driver and he was under the belief that the licence, which the driver produced before him, was genuine and, therefore, he had not committed any deliberate act of breach of terms of the policy. The mere fact that the licence is fake answers only one part of the problem but an owner acting on a licence which was produced by the driver and believing bona fide that it is genuine will be the other issue, for, we address the issue of excluding the liability for an insurer only in the context of whether the insured had committed a breach or not. If the insured himself could not have participated in the fake or the forged nature of the licence, then it cannot be stated that the insured had committed the breach. This aspect has already been considered by the Hon''ble Apex Court in National Insurance Co. Ltd. Vs. Swaran Singh and Others, ). Having regard to the specific evidence and the statement given on behalf of the owner, the insurer is bound to indemnify the insured and there will be no scope for providing a right of recovery. Learned counsel vehemently urges that if such a contention is possible it will forestall an insurer for claiming a recovery and every owner will begin to claim that he was under such a bona fide belief. The bona fide belief is invariably a question of fact based on the pleading and if there had been such evidence, in the light of what is required to be proved for breach of terms of the policy u/s 149 and how it has been explained by the Hon''ble Apex Court in Swaran Singh''s case (supra), the insurance company shall not still doggedly insist that it will not indemnify the insured. Appeal is without merit and it is dismissed as such.