PAPPU AND ORS. versus VINOD KUMAR LAMBA AND ANR. on 19 January 2018

[2018] 1 S.C.R. 195

PAPPU AND ORS.

v.

VINOD KUMAR LAMBA AND ANR.

(Civil Appeal No. 20962 of 2017)

JANUARY 19, 2018

[DIPAK MISRA, CJI, A. M. KHANWILKARAND DR. D. Y. CHANDRACHUD, JJ.]

Motor Vehicles Act, 1988:

s. 149(2)(a)(ii) – Motor vehicle accident – Liability of theinsurance company – Onus to prove that offending vehicle wasdriven by unauthorized person – On whom – On facts, offendingtruck driven rashly and negligently, resulting in death of victim –Courts below absolved the Insurance company from its liability inrespect of truck since the same was not driven by a person havinga valid licence – On appeal, held: Insurance Company is entitled totake a defence that the offending vehicle was driven by anunauthorised person or the person driving the vehicle did not havea valid driving licence – Onus would shift on the Insurance Companyonly after the owner of the offending vehicle pleads and proves thebasic facts within his knowledge that the driver of the offendingvehicle was authorised by him to drive the vehicle and had a validdriving licence at the relevant time – On facts, owner of the offendingvehicle did not produce any evidence except a driving licence ofone driver, without any specific stand taken in the pleadings or inthe evidence that the same driver was, in fact, authorised to drivethe vehicle in question at the relevant time – Insurance Companyplainly refuted the plea and also asserted that the offending vehiclewas not driven by an authorised person having valid driving licence– Merely producing a valid insurance certificate in respect of theoffending truck was not enough for the owner to make the InsuranceCompany liable to discharge his liability arising from rash andnegligent driving by the driver of his vehicle – Thus, tribunal rightlyabsolved the Insurance Company from any liability for just reasonsas affirmed by High Court.

Motor vehicle accident – Liability of the insurance company,when absolved – Owner of the vehicle produced the insurance

195

A

B

C

D

E

F

G

H

Acertificate indicating that vehicle was comprehensively insured bythe Insurance Company for unlimited liability – Held: Even if theinsurer succeeds in establishing its defence, the tribunal or the Courtcan direct the insurance company to pay the award amount to theclaimant and, in turn, recover the same from the owner of the vehicle– To sub serve the ends of justice, the insurer to pay the claim amountBawarded by tribunal as confirmed by the High Court to the claimantsin the first instance, with liberty to recover the same from the ownerof the vehicle in accordance with law.

National Insurance Co. Ltd. v. Swarn Singh and Ors.[2004] 1 SCR 180 : (2004) 3 SCC 297 – relied on.C

Case Law Reference

[2004] 1 SCR 180

relied onPara 15

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 20962of 2017.DFrom the Judgment and Order dated 09.10.2014 of the High Courtof Judicature at Allahabad in First Appeal from Order No. 1138 of 2000.

Sharve Singh, Sanjai Singh, Rajeev Singh, Advs. for the Appellants.

Rishi Malhotra, Adv. for the Respondents.EThe Judgment of the Court was delivered by

A. M. KHANWILKAR, J. 1.This appeal questions the legalityand tenability of the judgment of the High Court of Judicature at Allahabadin First Appeal from Order No.1138 of 2000, dated 9[th] October, 2014,whereby the appeal filed by the appellants was dismissed by the HighFCourt whilst rejecting the only question raised before it regardingabsolving the Insurance Company (Respondent No.2) from any liabilityin respect of truck bearing No.DIL-5955, which was duly insured byrespondent No.2 Insurance Company, on the ground that the same wasnot driven by a person having a valid licence, as found by the MotorGAccident Claims Tribunal, District Allahabad in Claim Petition No.215of 1999.

2. In the claim petition it was asserted that on 12.08.1995 OmPrakash, son of Satku Lal, was driving Truck No.URS-2735 when itwas knocked down by a rashly and negligently driven Truck No.DIL- H

5955 coming from the opposite direction, as a result of which Om Prakashsuccumbed to fatal injuries. The claim petition was filed by the widow ofdeceased Om Prakash. Om Prakash left behind his children Pappu, aged16 years, Ramu, 12 years, Kumari Geeta, 14 years, Kumari Neetu, 10years, Kumari Guriya, 8 years and his mother, Smt. Shiv Rani, at thetime of the accident. The widow of deceased Om Prakash claimedcompensation of Rs.7 lakh under Fault Liability and Rs.25,000/- underNo Fault Liability. The mother of Om Prakash claimed compensation ofRs.50,000/- separately. On the date of the accident, Om Prakash wasaround 35 years of age and was a driver by profession.

3. In the context of the sole contention raised before the HighCourt and reiterated before this Court, it is not necessary for us to dilateon factual aspects considered by the Tribunal except to state that theTribunal, on analysis of the evidence on record, held that Om Prakashdied because of the accident caused by rash and negligent driving ofTruck No.DIL-5955. Although the Tribunal allowed the claim petition inpart, it absolved respondent No.2 Insurance Company by dismissing theclaim petition against the said respondent. The Tribunal awarded a sumof Rs.25,000/- to opposite party No.3 Shiv Rani and Rs.1,75,000/- toclaimant Nos.1 to 6, with interest at the rate of 12% per annum from thedate of petition till the date of payment. In other words, the claim petitionwas partly allowed against respondent No.1 - the owner of the offendingvehicle DIL-5955.

4. In the appeal preferred by the appellants/claimants against thesaid decision, the only question urged before the High Court was aboutthe correctness of the view taken by the Tribunal in absolving therespondent No.2 Insurance Company even though the offending TruckNo.DIL-5955 was duly insured by the said Insurance Company. TheHigh Court affirmed the view taken by the Tribunal that there was nopleading or any evidence adduced by the owner of the offending Truckto substantiate the fact that the Truck was driven by one Joginder Singh,whose driving licence was produced on record. The High Court alsonoted that there could be no presumption that Joginder Singh was drivingthe offending vehicle. The appellants have assailed the aforesaid viewtaken by the Tribunal and affirmed by the High Court.

5. According to the appellants, the Insurance Company did notproduce any evidence before the Tribunal. As a result, it was not open tothe respondent No.2 Insurance Company to extricate itself from the A

B

C

D

E

F

G

H

Aliability, having duly insured the offending vehicle DIL-5955, which facthas been substantiated by production of the Insurance Policy. A defencebeing available to the Insurance Company, that the offending vehiclewas not driven by an authorised person and/or person not having a validdriving licence, it was obligatory on the part of the Insurance Companyto substantiate that defence and more so, to rebut the plea taken by theBowner of the offending vehicle that the offending vehicle was beingdriven by an authorised person having a valid driving licence. To buttressthis argument, reliance has been placed on the decision of this Court in the case of National Insurance Co. Ltd. Vs. Swarn Singh and Ors.[1]

6. We have heard Mr. Sharve Singh, learned counsel appearingCfor the appellants and Mr. Rishi Malhotra, learned counsel appearing forthe Insurance Company.

7. In the context of the issue that arises for our consideration, wemay first advert to the claim petition. In the claim petition, the name ofthe driver of the offending vehicle DIL-5955 has not been mentioned.DThe assertion made in the claim petition is that Truck No.URS-2735driven by Om Prakash was knocked down by the offending TruckNo.DIL-5955 coming from the opposite direction by rash and negligentdriving. The reply filed by respondent No.1 – owner of the offendingTruck DIL-5955 also does not mention the name of the driver of theEoffending Truck No.DIL-5955. Indeed, the reply filed by respondentNo.1 asserts that the vehicle No.DIL-5955 was comprehensively insuredby the respondent No.2 Insurance Company for unlimited liability. Thedetails of the Insurance Certificate have been mentioned in the WrittenStatement. In paragraph 18 of the Written Statement, however, a vagueassertion has been made that on the alleged date of incident, the offendingFvehicle DIL-5955 was plied by an authorised person having a valid drivingpermit.

8. In the Written Statement filed by the respondent No.2 InsuranceCompany to oppose the claim petition, it is asserted that the claimantsshould be put to strict proof about the occurrence of the accident andGother related matters. It is then asserted that no insurance is directlyissued by the Head Office of respondent No.2. The name of the BranchOffice by which the vehicle in question was allegedly insured has notbeen disclosed and in its absence, it was difficult to trace out the insurancepolicy. Further, the original insurance policy will have to be summoned H 1 (2004) 3 SCC 297

from the Insurer or owner of the vehicle. It is then asserted that neitherhas the alleged owner of the vehicle (respondent No.1) informed aboutany claim nor have the claimants made any claim to the InsuranceCompany. As regards the plea taken by respondent No.1 - owner of theoffending vehicle, in paragraph 29 of the Written Statement, it has beenasserted by respondent No.2 as follows:

“29. That in petition anywhere or in column 16 of the petitiondetails or driving licence of the alleged driver are not given and inabsence of details it is quite impossible for answering oppositeparty to ascertain the driving licence and its validity on the allegeddate of accident, hence the driving licence if any and its validityon the alleged date of accident is denied. The answering oppositeparty could not be held liable for payment of any award if made,unless it is proved that the vehicle allegedly involved in the allegedaccident was driving under valid driving licence by its authorizeddriver with due permission and under control of its owner andunder valid road, permit, fitness, road tax etc. as required underthe provisions of M.V. Act and also was driven with full complianceof the terms and conditions of the alleged insurance policy.”

It is not necessary to reproduce the other averments in the WrittenStatement filed by respondent No.2.

9. On the basis of these pleadings, the matter proceeded beforethe Tribunal. Admittedly, the respondent No.1 - owner of the vehicle didnot produce any evidence in support of his plea taken in the WrittenStatement that the offending vehicle was plied by an authorised personhaving a valid driving permit. All that respondent No.1 did was to producea driving licence purportedly of one Joginder Singh. The Tribunaladverted to the said driving licence but found that nowhere the owner ofthe vehicle has asserted that the Truck No.DIL-5955 was in fact drivenby said Joginder Singh at the time of the accident. On the basis of thepleadings, the Tribunal framed issue No.3 and answered the same infavour of the Insurance Company as follows:

“Issue No.3: Whether the Truck No. DIL-5955 was not beingdriven by a person having valid and effective driving licence?

As it has been stated earlier, that the owner of TruckNo. DIL-5955 has filed original driving licence of one JoginderSingh but he has not mentioned anywhere that Joginder Singh A

B

C

D

E

F

G

H

Awas driving his truck at the time of accident. The owner has filedphoto copy of insurance policy in which at paragraph 5 proviso A,it is written that the insurance company will be liable when driverwas holding a valid and effective driving licence. The owner ofthe vehicle has not proved that his driver was holding a valid andeffective driving licence. This issue is decided in the negative.”B10. This view taken by the Tribunal was assailed before the HighCourt by the claimants. No other contention was raised before the HighCourt except about the liability of the Insurance Company. The HighCourt, after analysing the record, negatived the said contention in thefollowing words:C

“5. The only question which has been raised before this Court is,whether Insurance Company has rightly been held not liable byholding that Truck No. DIL 5955 was not being driven by a personhaving valid licence. This Court has to consider, whether findingsrecorded in respect of issue no.3 is correct or not.

D6. Learned counsel for the appellants could not dispute that neitherany pleadings nor evidence have been led before Tribunal tosuggest or to tell, as a matter of fact, that aforesaid truck wasbeing driven by Sri Joginder Singh. It is not in dispute that ownerof aforesaid vehicle produced driving licence which was in thename of Sri Joginder Singh but at no stage it is pleaded or broughtEon record before Tribunal that Sri Joginder Singh was the personwho was driving aforesaid Truck. This fact has been noticed byTribunal in the impugned order as under.

‘Joginder Singh Ko Prastut Kiya Gaya Hai Parantu Joginder SinghTruck No. 5955 Ka Chalak Tha Yah Kahi Par Bhi Nahi KahaFGaya Hai.’

7. Learned counsel for the appellants could not dispute this fact.In view of above statement of fact that it was not pleaded orproved before Tribunal, the mere production of driving licence ofSri Joginder Singh, by owner of vehicle, cannot raise a presumptionGthat he was a person who was driving vehicle. The findingsrecorded by Tribunal, therefore, cannot be faulted in any manner.No other argument has been advanced.”

11. The question is: whether the fact that the offending vehiclebearing No.DIL-5955 was duly insured by respondent No.2 InsuranceHCompany would per se make the Insurance Company liable? This Court

in the case of National Insurance Co. Ltd. (supra), has noticed thedefences available to the Insurance Company under Section 149(2)(a)(ii)of the Motor Vehicles Act, 1988. The Insurance Company is entitled totake a defence that the offending vehicle was driven by an unauthorisedperson or the person driving the vehicle did not have a valid drivinglicence. The onus would shift on the Insurance Company only after theowner of the offending vehicle pleads and proves the basic facts withinhis knowledge that the driver of the offending vehicle was authorised byhim to drive the vehicle and was having a valid driving licence at therelevant time. In the present case, the respondent No.1 owner of theoffending vehicle merely raised a vague plea in the Written Statementthat the offending vehicle DIL-5955 was being driven by a person havingvalid driving licence. He did not disclose the name of the driver and hisother details. Besides, the respondent No.1 did not enter the witness boxor examine any witness in support of this plea. The respondent No.2Insurance Company in the Written Statement has plainly refuted thatplea and also asserted that the offending vehicle was not driven by anauthorised person and having valid driving licence. The respondent No.1owner of the offending vehicle did not produce any evidence except adriving licence of one Joginder Singh, without any specific stand taken inthe pleadings or in the evidence that the same Joginder Singh was, infact, authorised to drive the vehicle in question at the relevant time. Onlythen would onus shift, requiring the respondent No.2 Insurance Companyto rebut such evidence and to produce other evidence to substantiate itsdefence. Merely producing a valid insurance certificate in respect of theoffending Truck was not enough for the respondent No.1 to make theInsurance Company liable to discharge his liability arising from rash andnegligent driving by the driver of his vehicle. The Insurance Companycan be fastened with the liability on the basis of a valid insurance policyonly after the basic facts are pleaded and established by the owner ofthe offending vehicle - that the vehicle was not only duly insured butalso that it was driven by an authorised person having a valid drivinglicence. Without disclosing the name of the driver in the Written Statementor producing any evidence to substantiate the fact that the copy of thedriving licence produced in support was of a person who, in fact, wasauthorised to drive the offending vehicle at the relevant time, the ownerof the vehicle cannot be said to have extricated himself from his liability.The Insurance Company would become liable only after such foundationalfacts are pleaded and proved by the owner of the offending vehicle.

AB

C

D

EF

G

H

A

12. In the present case, the Tribunal has accepted the claim of theappellants. It has, however, absolved the respondent No.2 InsuranceCompany from any liability for just reasons. The High Court has alsoaffirmed that view. It rightly held that there can be no presumption thatJoginder Singh was driving the offending vehicle at the relevant time.

B13. Be that as it may, no grievance about the quantum ofcompensation awarded by the Tribunal has been made by the appellants– claimants (either before the High Court or before us in this appeal).Hence, that issue does not warrant any scrutiny. Similarly, the owner ofthe vehicle (respondent No.1) has not challenged the findings of theTribunal as affirmed by the High Court in favour of the insurer (respondentCNo.2), including on the factum that the vehicle was driven by a personwho did not have a valid driving licence at the relevant time.

14. The next question is: whether in the fact situation of this casethe insurance company can be and ought to be directed to pay the claimamount, with liberty to recover the same from the owner of the vehicleD(respondent No.1)? This issue has been answered in the case of NationalInsurance Company Ltd. (supra). In that case, it was contended by theinsurance company that once the defence taken by the insurer is acceptedby the Tribunal, it is bound to discharge the insurer and fix the liabilityonly on the owner and/or the driver of the vehicle. However, this CourtEheld that even if the insurer succeeds in establishing its defence, theTribunal or the Court can direct the insurance company to pay the awardamount to the claimant(s) and, in turn, recover the same from the ownerof the vehicle. The three-Judge Bench, after analysing the earlier decisionson the point, held that there was no reason to deviate from the said well-settled principle. In paragraph 107, the Court then observed thus:

F

“We may, however, hasten to add that the Tribunal and the courtmust, however, exercise their jurisdiction to issue such a directionupon consideration of the facts and circumstances of each caseand in the event such a direction has been issued, despite arrivingat a finding of fact to the effect that the insurer has been able toestablish that the insured has committed a breach of contract ofinsurance as envisaged under sub-clause (ii) of clause (a) of sub-section (2) of Section 149 of the Act, the insurance company shallbe entitled to realize the awarded amount from the owner or driverof the vehicle, as the case may be, in execution of the same award G

H

having regard to the provisions of Sections 165 and 168 of theAct. However, in the event, having regard to the limited scope ofinquiry in the proceedings before the Tribunal it has not been ableto do so, the insurance company may initiate a separate actiontherefor against the owner or the driver of the vehicle or both, asthe case may be. Those exceptional cases may arise when theevidence becomes available to or comes to the notice of the insurerat a subsequent stage or for one reason or the other, the insurerwas not given an opportunity to defend at all. Such a course ofaction may also be resorted to when a fraud or collusion betweenthe victim and the owner of the vehicle is detected or comes tothe knowledge of the insurer at a later stage.”

Further, in paragraph No.110, the Court observed thus:

110. The summary of our findings to the various issues as raisedin these petitions are as follows:

(i) Chapter XI of the Motor Vehicles Act, 1988 providingcompulsory insurance of vehicles against third party risks is asocial welfare legislation to extend relief by compensation to victimsof accidents caused by use of motor vehicles. The provisions ofcompulsory insurance coverage of all vehicles are with thisparamount object and the provisions of the Act have to be sointerpreted as to effectuate the said object.

(ii) Insurer is entitled to raise a defence in a claim petition filedunder 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 driveror invalid driving licence of the driver, as contained in Sub-section(2)(a)(ii) of Section 149, have to be proved to have been committedby the insured for avoiding liability by the insurer. Mere absence,fake or invalid driving licence or disqualification of the driver fordriving at the relevant time, are not in themselves defencesavailable to the insurer against either the insured or the third parties.To avoid its liability towards insured, the insurer has to prove thatthe insured was guilty of negligence and failed to exercisereasonable care in the matter of fulfilling the condition of the policyregarding use of vehicles by duly licensed driver or one who wasnot disqualified to drive at the relevant time, A

B

C

D

E

F

G

H

A

B

C

D

E

F

G

H

A

B

C

D

E

F

G

H

A

B

C

D

E

F

G

H

(iv) The insurance companies are, however, with a view to avoidtheir liability must not only establish the available defence(s) raisedin the said proceedings but must also establish ‘breach’ on thepart of the owner of the vehicle; the burden of proof where forwould be on them.

(v) The court cannot lay down any criteria as to how said burdenwould be discharged, inasmuch as the same would depend uponthe facts and circumstance of each case.

(vi) Even where the insurer is able to prove breach on the part ofthe insured concerning the policy condition regarding holding of avalid licence by the driver or his qualification to drive during therelevant period, the insurer would not be allowed to avoid its liabilitytowards insured unless the said breach or breaches on the conditionof driving licence is/ are so fundamental as are found to havecontributed to the cause of the accident. The Tribunals ininterpreting the policy conditions would apply “the rule of mainpurpose” and the concept of “fundamental breach” to allowdefences available to the insured under Section 149(2) of the Act.

(vii) The question as to whether the owner has taken reasonablecare to find out as to whether the driving licence produced by thedriver, (a fake one or otherwise), does not fulfil the requirementsof law or not will have to be determined in each case.

(viii) xxx

(ix) xxx

(x) Where on adjudication of the claim under the Act thetribunal arrives at a conclusion that the insurer hassatisfactorily proved its defence in accordance with theprovisions of Section 149(2) read with Sub-section (7), asinterpreted by this Court above, the Tribunal can directthat the insurer is liable to be reimbursed by the insuredfor the compensation and other amounts which it has beencompelled to pay to the third party under the award of thetribunal Such determination of claim by the Tribunal will beenforceable and the money found due to the insurer fromthe insured will be recoverable on a certificate issued bythe tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. Thecertificate will be issued for the recovery as arrears of landrevenue only if, as required by Sub-section (3) of Section168 of the Act the insured fails to deposit the amountawarded in favour of the insurer within thirty days from thedate of announcement of the award by the tribunal.

(xi) The provisions contained in Sub-section (4) with provisothereunder and Sub-section (5) which are intended to coverspecified contingencies mentioned therein to enable theinsurer to recover amount paid under the contract ofinsurance on behalf of the insured can be taken recourseof by the Tribunal and be extended to claims and defencesof insurer against insured by, relegating them to the remedybefore, regular court in cases where on given facts andcircumstances adjudication of their claims inter se mightdelay the adjudication of the claims of the victims.”

(emphasis supplied)

15. In the present case, the owner of the vehicle (respondentNo.1) had produced the insurance certificate indicating that vehicle No.DIL- 5955 was comprehensively insured by the respondent No.2(Insurance Company) for unlimited liability. Applying the dictum in thecase of National Insurance Company Ltd. (supra), to subserve the endsof justice, the insurer (respondent No.2) shall pay the claim amountawarded by the Tribunal to the appellants in the first instance, with libertyto recover the same from the owner of the vehicle (respondent No.1) inaccordance with law.

16. Accordingly, the appeal is allowed to the extent that thecompensation amount awarded by the Tribunal and confirmed by theHigh Court shall be paid and satisfied by the insurer (respondent No.2)in the first instance, with liberty to recover the same from the owner ofthe vehicle (respondent No.1) in accordance with law.

17. Appeal is disposed of in the aforementioned terms with noorder as to costs.

Nidhi Jain

Appeal disposed of.

A

B

C

D

E

F

G

H