^ ^ Resoondents (Driver) HtGH COURT OF CHHATTISGARH AT BILASPUR Miscellaneous Appeal No.183/2003 Single Bench: Hon'ble Shri Dilip Raosaheb Deshmukh, J. Appellant National insurance Co. Ltd. (Insurer) Chowrasiya Comptex, Rewa Panna Road, Samaria Chowk Satna, through its Branch Manager. at Branch Office, Bllaspur (Chhattisgarh) Vereus 1. Rameharan, S/@ Rameshwar Patel, aged about 30 years, Wo ViUage Jhinna. P.S< Ramnagar, Tah. Amarpatan. District Satna (M.P.) Owner 2. Sadhulat, S/o Bhagwandin Bais, aged about 48 years, R/o VHtage Kenchwari, P.S. Ramnagar, Tah. Amarpatan, District Satna (M.P.) Cjaimants 3. BanshiLal, S/o Ganga Prasad, aged about 45 yrs, Caste Satnami, 4. Revati Bai, W/o Banshi Lal, aged about42y^rs, Both residents of Viltage Sendrt, P.S. Koni. Tahsil and District Bilaspur (CG) Appeal under Section 173 of Motor Vehiete Act Present:- Shri Sanjay K. ^arwal with Shri Sourabh Sharma, counset for ttie appellanVlnsurance Company. Smt. Indira Tripathi, counset for respondente No.1 & 2. Shri Goutam Khefrapal, counsel for respondente No. 3 & 4. ORAL ORDER (Passed on 3rd August. 2007) In this appeal the appellant/lnsurance CompaBy has impugned the award dated 28.11.2002 passed by the IIIrd Actditionat Motor Accident Claims Tribunal, Bilaspur in daims case No. C^/2002, whereby ^ ^ <£-, \ compensation of Rs.1 ,( ,000/- was zwarded against the appellarrt/tnsurer for accidental death of one Satya Prakash, aged 19 yeare. (2) The following fiacts are not disputed m this appeal:- A/ That, Satya Prate^h aged 19 years died an accidental death due to cotliston with fruek No. M.P. 19/4774 (hereinafker referred to as the "truck") on 20.05.1997 which was being driven by the respondent No.1 namely Ramcharan (hereinafter referred to as the drh/er) wid owned by respondent No.2 Sadhulal (hereinafter referred to as the owner). B/ That before the asxidWt, the truck was transferred by the owner in favour of one Ramlal Baiswar. C/ That, the truck was insured vnder a \/aM potiey insurance by the appellant/lnsurer <w ttie date oftheacddent. (3) The respondents No. 3 and 4 being the parente of the deceased, filed an application under Section 166 of the Motor Vdiides fad, 1988 (hereinafter referred to as the 'Acf) for compensation against the owner, drwer and jnsured and pleaded that at about 1.A.M. vrtiile Satya Pralaish. aged 19 yeare was assisting the replacement of the puncturedwheel of a tractor on the main road at Village Sendri, thedr^w drove the truck in a rash and n^ligent manner and crushed Safya Prakash anderneatti resulting in his death. ^ ^' ^ \ \. (4) The appellant/lnsurer pleaded that the drhrer of the effending tmek did not possess a wilid driving licence at fte time <rf accident and ttiat the owner of the truck had transferred the ownerehip of ftie fruck in fevour of one Ramlal Baiswar before the accident, without giving any IntimatiCTi to the appellanVinsurer. The appellant/lnsurer thus pray^l before the M.A.C.T that there was a fundamental breach of policy eondition and liability to pay compensation could not be fastened on it. (5) The drwer and owner of the truck filed a pint wntten statement smct pleaded that the driver of the truck had a vatid drwing licence and since the truck was insured by the appellant on the date of accident, fie insyrer was liable to pay compensation. After filing written statement, the driver and owner not only remained exparfe but also did not enter the wltn^s box before the M.A.C.T. (6) The MA.C.T. recorded a finding thart Satya Prakash died ^ a result of rash and negligent dr'iving by the drtwr of the fruck. ft fuither recordeda finding that the appeHanVinsurer could not escape tebtlity to pay compensation merely on tiie ground that the tmek was fransferred by its owner before the accident without intimatton to ttie apj^lantflnsurw. It fiirther held that it could not be said that the owner of the frBGk had not used due diligence in allowing the vehide to be driven by ttie respondent No.1, i.e. a duly licenced driver, and ttierefore, fastened ttie liabitity <wi the insurance company to pay compensafUon of Rs.1 ,(^,(XK)/-. ^ ^. \ (7) Shri Sanjay K. Agarwal, tearned counsel for the appellant/lnsurance Company has urged the following two points in thls z^peal. A/ that, upon fransfer of the fruck befor®the date of accident by Its owner, it was the duty of the owner to send intimation to the appellemt/hTsueEmro company regarding the transfer, faiting which the appellant/insurance company was rwt liabte to pay compensation. B/ it was urged that the insurance company had discharged the initial burden by proving the certificate issued by the Regional Transport Offfcer issued after due verification that tiie licence number pertained to a raotor cycle andwas issued in the name of one Rajendra Prasad. (t was also urged that by further examining ttie Asstetant Administrative Officer of the tnsurance Company and by proving the certificate issved by the licensing authority as also the report @f the authorized Investigator of the insurer, ttie initfel burden was discharged by the InsuraTce Company and it was for ttie owner of the vehide te lead evidence to show ttiat he had used due diligence and taken all precautions to see that the truck was driven by a duly liceneed driver at the time of the accident. ^v ^' \. \\ Reliance was placed on Natione^ frisumnc®Co. Lfct Vs Swaian Sinah ancfofhers - 2004 AIR SCW 663, Nattonal Insurance Oo. Ltd. V& Kusum Rai and Othefs - 2006 (2) T.A.G. 1 (S.C.), L^Qb^Vs. Qte^/ InsuraFHw Co. Ltd, (20061 7 Suoreme Court Cases 318. A/arttoraaf fr2§(ffa£^L£Q_L&-Vs.Laxmi NafaSn Dhiit 2007 AIR SGW 2278 antt Unitedlndia Inswance Co. Lfef. S^mte Vs. T/tefr SfoafeaocfOthws. (208®) 4 Supreme Court Cases 404 white aiguing that ttie liability to pay compensatiwi ought not to be fastened on ttie insurer inrfio shoukl be given the right to recover compensation paid by ft from the ©swier. (8) On Ihe other hand, Smt Indira Trtpattii, haam«lcounsel a|^3®arNTg for the owner placed reliance on Swaran Singht« case (St^>ra) anil contended that the appellant/lnsurer did not clischarge its burden <rf proving that ttie insured had faited to exerdse reasonaMe <are in the matter offutfilling the condition ofthe policy of insurwice regarding use of v vehlcle either by a duly Ucenced driver or by one whowas mxt disqualitied to drive at the relevant time. Reliance was ptaced on \^tBV Praks^tT^Mri Vs. Smt Satva Bhama Devi and frihers. 2007 (3) M.P.H.T. 68 (DB) tn support of ttie contention that since the initial bur<ten which WBBS on ttie insurance Company was not discharged, the M.A.C.T. had rightly fastened the liabil'rty on the appellant/lnsurer to pay compensatron. Shri ©outam Khetrapat, leamed counsel appearing for ttie claimarrts aigued in sapport of the impugned award. (9) Having consldered the rh«l submissicnTO, 1 hav®twused the record. So fer as ttie firat contention urged t^ ftie teacned cotinsel for the appellant/insurer is concemed, Section 157 oftheAct reacte as under- ^ 6 \ 157. Transfer of certificate of insurance.-(1) Where a person in whose favour the cerBficate of insurance has been issued in accordance with the provfetons of this Chapter transfers to another person the owneiship @f the motor vehicle in respect of whtch such insurance was taken together with ttie policy of insuraroe relattng thereto, ttie certificate of Insurance and tiiie pdicy describwl in the certificate shatl be deemRed to havebeen transferred in favour of the person to whem ttie motor vehrcle is transferred witti effect ftom ttie date <rf te transfer. [ExplanaUon- For the removal of doubts, it fe her^by declared that such deemed fransfer shall inctude tianstter of righte and liabilfties of the said certificate of (r^urance and policy of insurance] (2) The transferee shall apply wlthin fwirteen de^s from ttie date of transfer in Ihe prescribed form to the insurer for making necessary changes in regard to the fact of fransfer in the certificate of insuran<» and ttie policy described in ttie cerfflcate in his favour and the insurer shalt make the necessaiy changes in th® certificate and the policy of insuranw hi regard to ttie transfer of insurance. (10) In Union of tneSa InsurancQ Co. Ltd. Shimla vs. Tilak Sinah and o iers. (20061 4 SCC 404, while considering th®provisions of Section 103-A of the Motor Vehicles Act. 1939 (hencefortli, ttie Act, 1939) and ttte corresponding provision contained in Section 157 oftheAct, 1968 witti reference to the liability ofthe insurance-Company vis-ii-yis the deceased- third party, the Apex Court had observed as under "9. Citing with approval the Judginerrt of tie Fult Bench of ttie Andhra Pradesh High Courl in MksaSneiii '\, ^ X fe-< Kondaiah v. Yaseen FaSma (AIR 1986 AP 62) and contrasting the provisions of Section 103-A of ttie 1939 Act with Section 157 of the 1988 Act, this Court said in Complete Insulations (P) Ltd. v. New IncSa Assursawe Co. Ltd. l(1996) 1 SCC 221] (vide SCC p. 225,para 6): "6. Now, under ttie old Act although the insurer could refuse to transfer ttie certificate of insufance in certsrin circumstances and the transfer was not automatte as under the new Act, there was under the otd taw protection to third parties, that is, victims of theaccident. The protectton was available by virtue of Secfion 94 and 95oftheoldAct" 10. ttie judgment of the Andhra Pradesh High Court in KoneSeaah was specifically referred to and afflrm«lin the subsequentjuc^mentofthis Court in Atew India AssafWTce Ca Lfcfc v. Sheefe Raro f(1998) 6 SCC S99J where this Court observed after referring to ttie judgment in Gomptete Insulations as follows: (vide SCC p. 604, para tO): "A carefut reading of the judgmwrt of this, extracted as above, will cleariy show ttiat on the transfer of the vehicte about which intimation was given tiiough notstrictly as required under Section 103-A of the Act and in the absence of refusaj from the insurer, the pelicy already given by the Insurance Company to the tonsferor will not lapse." 11. In G.'Govindanv. New IncSa Assuranoe Co. Lfcfc [(1999)3 SCC 754Jthis Court had occasion to refer to the decisions of the Full bench of the Andhra Pradesh High Court in Kondafefi case, Compl^e InsulationsLtd. and New India Assurance Co. Ltd. v. Sheela Rarv h the context of the 1988 Act and, after contrasting it whti the provislons of the 1939 Act, held (vide SCCp. 761, para 13): "13. In ouropinion, botti under the old Act and under ttie new Act ttie legislature was ansdous to protect <A^ ^ L-, the third-party (victim) inter^t. It appears that what was implicft in the provisions of the otd fivot te n@w made explicit, presumably in ^Aesw of the conflrcting decisions on this aspect among Uie various High Courts." 12. In Rikhi Ram v. Sukhrania [(2003) 3 SCC 97^ a Bench ofthree teamed Judges ofthis Court had occasionto consider Section 103-A of the 1939 Act. This Court reafRrmed the dedsion in G. Govindan case and adcted ftiat the liability of an insurer does not cease even if ttie owner or purchaser fails to gh/e intlmation of transfer to the Insurance Company, as the purywse of ttie legistefron was to protect the rights and Interest of the third party. 13. Thus, in our view, the sftuatlon in law which arises from the failure of the transferor t@ ncrtify the hisurer of the fact of fransfer of ownership of the insured wahicte is no different, whether under Section 103-A ofthe 1^9 Act or under Section 157 of the 1988 Act insofaras ttie liabllity towards a third party is concerned. Thus, whetherthe old Act applies to the facts before us, or ttre new Act applies, as far as the deceased third party was concemed, tfie result would not be dtfferent." (11) It is thus clear that under Section 157 of ftre Act, ©venthough intimatton of the Iransfer of ttie vehtcle was not gh/en to the inesurance company, the certificafe issued and ttiepolicy described in the certificate shatl be deemed to have been Iransferred in favour of ttie peison te whom the motor vehicte is transferred with effect from the date oftransfer. tn other words, under the deeming provision contajned in the sub'.dause (1) of Section 157, the appellant/lnsurer cannot escape tts liabUHy to pay ^ ^' x compensation towards the deceased Ihhrd |»rtyon the ground tiat the owner of the vehiete had not given intimation ofthefransfer ofthe veliicle, (12) So far as the second contention of the leamed coynsel for the appellant is concerned, in Swaran Sing's case (supra), ttie apex Court while summarizing ite findings held as under:- Summarv of findinas:- Xxxxxxxx xxxxxxxxxxxxx XXX)OO(XM (iii) The breach of poNcy condition e.g. disqualification of driver or invalid drivir^ llcence of the driver, as contained in sub-section (2)(a)(li) of Section 149, have to be proved to have been committed by the insured fw avoiding liabHity by the insurer. Mere absence, fake ar invalid dnving licenee or disqualifieatton of the dnver for driving at the relevant time, are not tn ttiemseh/es defences available to the insurer agahist e'rther the jnsured or the third parties. To avoid its liability towards insured, ttie insurer has to prove that ttie iisured was guilty of negligence and failed to exercise reasenable care in the matter of fulfiltmg the condition of ttie policy regardjng use of vehicles by duly liwnced driver or one who was not disquaiyied to drive at the relevant time. Qv) The insurance companies are, howwver, wth a view to avoid their tiability must not only establteh the a^^ilable defence(s) raised in the said proceedings but must also establish 'breach' on the partof the owner of the vehicle; the burden of proof wherefor would b@ on them. (v) The court cannot lay down any criteria as to how said burden would be discharged, inasmudi as the same ^\k 10 c. would depend upon the facts and Gircumstances of each case. (vi) Even where the insurer is able to prove breach on the part of the insured conceming ttie poticy condition regarding hotding of a valid licence by the drivw or his qualification to drive during the retevant period, tiie insurer would not beallowed to avoid s tiabitlty towarcts insured unless the said breach or breach^ 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 corKtitions would apply "the rute of main purpose" and ttie ooncept of "fiindamental breach" to altow defences availabte to the insured under Section 149^) of the Act. (vii) The question as to whether the owner has tsdcen reasonable care to find out as to whettier the driving licence produced bythe drwer, (a fake oneorottierwise), does not fulfil tiie requirements of taw or not witl have to be determined in each case. (13) It is thus ctear that tn order to avoid its ISabdity towards insured, the initial burden lies on the insurer to prove that the insured was guilfy of negligence and feiled to exercise reasonabte care in the mattw of fidfiltllr^ the condition of the policy regarding use of vehfcto by a duty Kcenced driver or one whowas rtot disquatified to drwe at the relevant time. In my considered opinion, the only manner in whteh the appellant/tnsurance company can discharge te initial burden is by proving ttie certificate issued by ttie licensing authority r^arding the licence b^g fake and by proving ttie repwt of the investigator. In the pre^wit ease, the appellant/lnsurer had not only proved the report of frie investigator Ex. A-2 ^.7 ^. •-< 11 but also the certificate issued by the Iteensing authoitty Ex./^3, whieh deariy proved that the licence number shown in the licence produced before the M.A.C.T. was in fact a licence to drive a motor cycte and was issued in the name of one Rajendra Prasad. Since the owner and th& driver of the vehiele remained ex parte after filing written statement and neither cross-examined the Assistant AdministratWB OfBt^- of the Insurance Company nor entered the wifriess box, itcannotbe said thatthe authenticity ofthe certificate issued bythe Iteensingauthority orthe r^)ort of the trwestigator is under any doubt. (f the driver/owner ofthe vehide had partidpated in the proceedings, cross-exammed the Asstetant Administrative Officer ofthe Insuranee Company or had ted any evictence, perhaps it could have been said that the lieensing aufhority or »re investigator ought to have been examined by ttie insurance company in support of its case. But, in the facts and ciroumstances of this case, ftie situation is quHse dlfferent. Both the owner and cfriver of the track dtel not participate in the proceedingsafter filing ofa joirrt wrtten statement and remained ex parie. Even in the written statement, noflijng wz^ |ri®adedto showthat the owner had, before entrusting the vehlde tothe driver, used due diligence and had taken sufficient care to satisfy that frie driver of the vehicte possessed vatid driving licence. A bare perusat oftheGGfpyofthe driving licence arouses suspicion about the authentieifyof the licence as ft is a second duplicate driving licence isaied m the name of one Ramcharan Patel. By merely looking at the licenre, any pereon of reasonable pmdence woukt have a serious doubt (hat the ticenee was fake. ^ ^•-.< 12 (14) In Laxminarain Dhut's case (supra) the ap^c Court has held that once ttie initial burden which lies on the insurerto showtiat the ticenc»is fake is satisfied, the natural consequences will flow thereupon. In Lalchand's case (supra), relied on by the teamed counsel for the owner, the facts were that the appellant^owner had entered ttie witness b<»(and had deposed that he had employed ttie driver after checldng hfs drivh^i licence, after taking his driving test and after satist^ng ttiatthe driver was fully competent and convereant wffih driving. Under the^ drcuiwteinf^, itwas held thatthe insurance compar^ had failed to pnwe that the owner of the vehide was in no manner guilty of negligence and had fButedto exerclse reasonable care in the matter of fulfilling ttie condition of the policy. (15) The present case is dearly distinguishabte. The inifial burden which lay upon the insurance company to prove that t»driver of the offending vehicle did not possess a valid driving Seence liavir^g been discharged, "rt was for the owner of the vehide to ^iow dither by cross- examining the witness of the insurancecompany w by teading hte own evidence to show how he had used due ditigence ortaken care te see that the driver of the vehicte possessed a valid driving ticence or ttiat he had taken care to verify ftrat the second duplicate licenee pww^wl by ttie driver of the truck was not fake. 1 am of ttie considered opinion that the appellant/lnsurance company has discharged its inrtial burden by pnwing that the drh/er of the truck did not pc^sess a walid driving licence at the time ofthe accident and in fact the Jjcence produced before the M.A.C.T. was a fake licence. In the absence of any material hswir^g been |w©diK%d by the owner of the vehicle before the M.A.C.T. as in Ladchand's case ^c\ 13 (supra) to show due diligence or reasonable care to ensure that the driver of ttie truck possessed a valid drivir^ licence, 1 am of the considered opinion that tiie insurance company has satisfactorily established a fijndamental breach of the policy condition that thedriver of fruck did not possess a valid licence. Placing reliance on the dictum (n Swaran Singh (supra) as also Kusum Rai & Others (si^ra), the insuranee company is not liable to pay compensation since it hs®satisfactority esteblished a fundamental breach of policy condition by the insured. HowBver, in tfie present case the owner of the truck had rematned ex pa/fe wid imder the policy of insurance the insurance company was statutorily HaUe to pay compensation. The daimants are from a poor bacl^reund. They must have suffered great mentel agony. It is a fit case in wriiich Ihe appellant/lnsurance company is directed to first pay the compensafion and be given the right to recover it from the owner of ttie vehicle. "\ ( Priya (16) In ttie result, ttie appeal is partly altowed. The impi^ned sward is modified and ft is hetd ttiat Uie appellant/insurer is not tiable to pay compensation in view of ttie fundamental breach of polfcy condition regarding use of the truck by a duly licenc^l driver. In the fects and circumstances of tiie case, the appetlanMnsurer shail dep<»itthe witire remaining compensation wthin a period of ^) days from today in the MA.C.T and may recover the compensation deposited ty it from the owner by filing execution proceedings before the concwned M.A.C.T. There shall be no order as to costs. Sd/- Dilip Raosaheb Deshmukh Judge