* THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR + M.A.C.M.A. No. 1655 of 2009 % 30.04.2011 # Sri Jayaprakash Agarwal and two others .. Appellants Vs. $ Mohd. Kaleemulla and another .. Respondents <GIST: >HEAD NOTE: ! Counsel for Appellants : Smt. A. Chaya Devi ^ Counsel for respondent No.1: --- Counsel for respondent No.2: Smt. A. Jayanthi ? CASES REFERRED : 1. 2004 ACJ 1 2. AIR 1987 SC 1184(1) 3. AIR 2001 SC 1419(1) 4. 2004 ACJ 457 5. AIR 1996 SC 2627 6. AIR 2007 SC 1563 7. AIR 2003 SC 1292 8. (2008) 17 Supreme Court Cases 208 9. (2004) 3 Supreme Court Cases 343 10. (2009) 5 SCC 136 11. (2009) 11 SCC 356 12. (2008) 12 SCC 385 13. (2006) 4 SCC 250 14. 2010 (4) ALD 586 15. AIR 2009 AP 142 16. AIR 2009 SC 24 17. (2008) 8 SCC 253 18. (2008) 1 SCC 696 19. 2008 ACJ 213 20. 2010-AndhWR-1-216 21. 2001(1) ALT 495(DB) 22. (2005) 2 SCC 673 23. (2009) 8 SCC 785 THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR M.A.C.M.A. No. 1655 of 2009 Judgment: Aggrieved by the award dated 02.02.2007 passed in OP No.2656 of 2003 on the file of the XXII Additional Chief Judge-cum- before the Motor Accidents Claims Tribunal, City Criminal Court, at Hyderabad, (hereinafter referred to as ‘the Tribunal’) to the extent of holding that the second respondent–Insurance Company is entitled to avoid its liability to pay the compensation to the claimants, the claimants have preferred this appeal. The parties hereinafter will be referred to as they are arrayed before the Tribunal for the sake of convenience. The first claimant is the father, second claimant is the mother and the third claimant is the sister of the deceased. Their case is that on 15.08.2003 at about 12.30 hours the deceased Alok Kumar Agarwal was proceeding on his Scooter bearing No. AP 12A 851 from Katedan to his house at Siddiambar Bazar and when he reached Miralam tank road, the offending lorry bearing No.ATT 3035 being driven by its driver-cum-owner Mohd. Kaleemulla came from opposite direction and dashed against the scooter and ran over the deceased. The deceased sustained grievous injuries and succumbed to injuries on the spot. The police, Bahadurpura, registered a case in Crime No. 154 of 2003, under Section 304-A IPC. It is also their case that the deceased was aged about 19 years, unmarried and working as a Purchase Manager in Pooja Priya Plasto Pack (P) Limited, Gaganpahad, Rajendranagar and earning Rs.8500/- per month as on the date of his death. Contending that they have lost their bread winner and love and affection of the deceased for untimely death of the deceased the claimants have filed the claim petition claiming total compensation of Rs.11,00,000/- against the first respondent-owner of the vehicle and the second respondent-the insurance company with which the vehicle was insured contending that both the respondents are jointly and severally liable to pay the compensation to them. The first respondent filed a counter and denied the material averments made by the claimants with regard to age, occupation and income of the deceased. It is also denied that he had driven the lorry in a rash and negligent manner and caused the accident. It is his case that he was having valid driving licence on the date of accident issued by the RTA and that the vehicle was insured with the second respondent-Insurance Company and therefore the insurance company is liable to indemnify him. He has also mentioned that he filed Xerox copy of the driving license along with counter. The second respondent filed a counter and denied the material averments made by the claimants. In their additional counter the second respondent has taken a specific plea that the driver of the vehicle was issued a driving license to drive non-transport vehicle valid for the period from 21.06.1992 to 11.02.1993 and whereas the accident occurred on 15.08.2003 and therefore on the date of accident the driver was not having valid driving license and consequently the Insurance Company is not liable to pay compensation to the claimants. On behalf of the claimants, the first claimant was examined as PW.1 and PWs.2 and 3 were examined and Exs.A1 to A8 were marked. On behalf of the respondents, RWs.1 and 2 were examined and Exs.B1 and B2 were marked. The Tribunal, on appreciation of oral and documentary evidence, particularly the evidence of PW.2, came to the conclusion that the accident occurred due to rash and negligent driving of the driver of the lorry. This issue is not in dispute in this appeal. On issue No.2, the Tribunal, relying on the judgment of the Apex Court in National Insurance Co.Ltd., v. Swaran Singh[1], came to the conclusion that though the driver of the lorry was not having valid driving license on the date of accident, but, however, the first respondent is liable to pay compensation to the claimants and accordingly directed the first respondent to pay compensation to the claimants. On the quantum of compensation the Tribunal assessed the income of the deceased at Rs.15,000/- per annum and after deducting 1/3rd towards personal expenses of the deceased, the loss of contribution was estimated at Rs.10,000/- per annum and on applying the multiplier ‘16’ determined the total compensation at Rs.1,72,000/-, which includes Rs.2,000/- towards funeral expenses and Rs.10,000/- towards loss of estate. As indicated supra, the claimants being aggrieved by the order of the Tribunal exonerating the second respondent-insurance company preferred this appeal. Smt. A. Chayadevi, learned counsel for the claimants, submitted that the Tribunal failed to appreciate the evidence on record in proper perspective and erred in holding that the insurance company proved that the insured had violated the terms and conditions of the policy. It is her main submission that the evidence of RWs.1 and 2 reveals that the driving licence can be renewed from any one of the offices of RTA and that originally the driver had obtained licence from RTA Office, Nandhed, Maharashtra and subsequently he got renewed his licence from RTA Office, East Zone, Hyderabad, but, since there are several similar offices in Hyderabad city itself as admitted by RW.2, the evidence of RWs.1 and 2 is not helpful to the insurance company and basing on such evidence it cannot be conclusively held that the driver was not having valid driving licence on the date of accident. It is also her submission that the insurance company had not furnished the copy of application which they filed before the RTA for obtaining Ex.B2 the particulars of the driving licence of one Kaleemulla. Her main submission is that even if it is held that the insured had violated the terms and conditions of the policy by not holding valid driving licence on the date of accident, the deceased being third party the insurance company cannot avoid its liability in respect of third parties. It is also her submission that merely because the driver was not having valid driving license it is not a valid reason to avoid its liability by the insurance company, but the insurance company has to prove that it was the main cause for occurrence of the accident and in this case there is no such evidence on record. She had relied on the decisions reported in Skandia Insurance Co.Ltd v. Kokilaben Chandravadan[2], New India Assurance Co., Shimla v. Kamla and others[3], National Insurance Co.Ltd v. Swaran Singh (1 supra) and Oriental Insurance Co.Ltd., v. Paulose[4]. Her submission is that the decisions of the Apex Court in Swaran Singh’s case and Paulose’s cases hold the field as on today and even if any other High Court or a Bench of lesser than three judges of the Apex Court had taken a different view, the same is not binding on this Court and this Court is bound to follow the decision of the Apex Court as long as the same is not reviewed by the larger bench of the Apex Court. Per contra, Smt. A. Jayanthi, learned counsel for the insurance company, submitted that in the case on hand the owner is the driver and in spite of receiving summons he did not appear before the Tribunal or before this Court. It is vehemently argued that it was obligatory on his part to inform the insurance company about the occurrence of the accident and he ought to have furnished all the particulars to the insurance company. Besides not furnishing the particulars to the insurance company, the first respondent did not appear before the Tribunal. It is her submission that mere taking a plea in the counter that he was holding a valid driving licence is not sufficient and it was obligatory on the part of the first respondent to establish that he was having valid driving licence on the date of accident. It is her main submission that the Apex Court had considered the violations under Section 149(2)(a)(ii) of the Motor Vehicles Act and categorically held that wherein the insured had entrusted the vehicle to a driver who was not holding valid driving licence on the date of accident the insurance company can avoid its liability and it is a statutory right given to the insurance company to avoid its liability. When the statute itself gives a right to the insurance company to avoid its liability and when it is established that the insured had violated the terms and conditions of the policy the Tribunal cannot direct the insurance company to pay the amount. It is her submission that the decisions relied on by the learned counsel for the claimants are not applicable to the facts of this case and the latest decisions of this Court and the Apex Court clarify the position that the insurance company is not liable to indemnify the insured when he had violated the terms and conditions of the policy. The point that arises for consideration is whether the insurance company has proved that the insured had violated the terms and conditions of the policy and if so whether it can avoid its statutory liability as per the guidelines of the Apex Court in Swaran Singh’s case? Sections 3, 4 and 5 of the Act are as follows:- 3. Necessity for driving licence:- (1) No person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorizing him to drive the vehicle; and no person shall so drive a transport vehicle other than (a motor cab or motor cycle) hired for his own use or rented under any scheme made under sub-section (2) of Section 75 unless his driving licence specifically entitles him so to do. (2) The conditions subject to which sub-section (1) shall not apply to a person receiving instructions in driving a motor vehicle shall be such as may be prescribed by the Central Government. 4. Age limit in connection with driving of motor vehicles:- (1) No person under the age of eighteen years shall drive a motor vehicle in any public place:- Provided that a motor cycle with engine capacity not exceeding 50 Christian Colony) may be driven in a public place by a person after attaining the age of sixteen years (2) Subject to the provisions of Section 18, no person under the age of twenty years shall drive a transport vehicle in any public place. (3) No learner licence or driving licence shall be issued to any person to drive a vehicle of the class to which he has made an application unless he is eligible to drive that class of vehicle under this Section. 5. Responsibility of owners of motor vehicles for contravention of Sections 3 and 4:- No owner or person in charge of a motor vehicle shall cause or permit any person who does not satisfy the provisions of Section 3 or Section 4 to drive the vehicle. Section 146(1) of the Act reads as follows:- 146. Necessity for insurance against third party risk:- (1) No person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter. Section 149 of the Act reads as under:- 149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks. (1) If, after a certificate of insurance has been issued under sub- section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub- section (1) of section 147 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments. (2) No sum shall be payable by an insurer under sub- section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:-- (a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:-- (i) a condition excluding the use of the vehicle-- (a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or (b) for organized racing and speed testing, or (c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or (d) without side- car being attached where the vehicle is a motor cycle; or (ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or (iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or (b) that the policy is void on the ground that it was obtained by the non- disclosure of a material fact or by a representation of fact which was false in some material particular. (3) Where any such judgment as is referred to in sub- section (1) is obtained from a Court in a reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of section 13 of the Code of Civil Procedure, 1908 (5 of 1908 .) conclusive as to any matter adjudicated upon by it, the insurer (being an insurer registered under the Insurance Act, 1938 (4 of 1938 .) and whether or not he is registered under the corresponding law of the reciprocating country) shall be liable to the person entitled to the benefit of the decree in the manner and to the extent specified in sub- section (1), as if the judgment were given by a Court in India: Provided that no sum shall be payable by the insurer in respect of any such judgment unless, before the commencement of the proceedings in which the judgment is given, the insurer had notice through the Court concerned of the bringing of the proceedings and the insurer to whom notice is so given is entitled under the corresponding law of the reciprocating country, to be made a party to the proceedings and to defend the action on grounds similar to those specified in sub- section (2). (4) Where a certificate of insurance has been issued under sub- section (3) of section 147 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in clause (b) of sub- section (2) shall, as respects such liabilities as are required to be covered by a policy under clause (b) of sub- section (1) of section 147, be of no effect: Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub- section shall be recoverable by the insurer from that person. (5) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person. (6) In this section the expressions" material fact" and" material particular" means, respectively a fact or particular of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk and, if so at what premium and on what conditions and the expression" liability covered by the terms of the policy" means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or has avoided or cancelled the policy. (7) No insurer to whom the notice referred to in sub- section (2) or sub- section (3) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment or award as is referred to in sub- section (1) or in such judgment as is referred to in sub- section (3) otherwise than in the manner provided for in sub- section (2) or in the corresponding law of the reciprocating country, as the case may be. It has to be seen that the legislature, in their wisdom, have specifically used the following words “Notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this Section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor”. Thus, it becomes necessary that the insurer shall be issued notice about the proceedings before the Tribunal as required under Section 149(2) of the Act. The Apex Court had elaborately dealt with all these issues in case between Skandia Insurance Co. Ltd., Vs. Kokilaben Chandravadan and others (2 supra). The facts of that case are that the driver had gone for bringing snacks from the opposite shop leaving the engine running. The ignition key was in the ignition lock and not in the cabin in the truck as alleged by the driver. The driver had handed over the control of the truck to the cleaner and the accident occurred when the cleaner moved the vehicle. Admittedly, the accident occurred when an un-licensed person was at the steering. In the circumstances, the Apex Court observed as follows:- “…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 fulfil 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 unlicensed 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 promisor is exculpated when he does everything in his power to keep the promise.” “…In order to derive the intention of the legislature in the course of interpretation of the relevant provisions there can scarcely be a better test than that of probing into the motive and philosophy of the relevant provisions keeping in mind the goals to be achieved by enacting the same. Ordinarily it is not the concern of the legislature whether the owner of the vehicle insures his vehicle or not. If the vehicle is not insured any legal liability arising on account of third party risk will have to be borne by the owner of the vehicle. Why then has the legislature insisted on a person using a motor vehicle in a public place to insure against third party risk by enacting S. 94. Surely the obligation has not been imposed in order to promote the business of the insurers engaged in the business of automobile insurance. The provision has been inserted in order to protect the members of the Community travelling in vehicles or using the roads from the risk attendant upon the user of motor vehicles on the roads. The law may provide for compensation to victims of the accidents who sustain injuries in the course of an automobile accident or compensation to the dependants of the victims in the case of a fatal accident. However, such protection would remain a protection on paper unless there is a guarantee that the compensation awarded by the Courts would be recoverable from the persons held liable for the consequences of the accident. A Court can only pass an award or a decree. It cannot ensure that such an award or decree results in the amount awarded being actually recovered, from the person held liable who may not have the resources. The exercise undertaken by the law Courts would then be an exercise in futility. And the outcome of the legal proceedings which by the very nature of things involve the time cost and money cost invested from the scarce resources of the Community would make a mockery of the injured victims, or the dependents of the deceased victim of the accident, who themselves are obliged to incur not inconsiderable expenditure of time, money and energy in litigation. To overcome this ugly situation the legislature has made it obligatory that no motor vehicle shall be used unless a third party insurance is in force. To use the vehicle without the requisite third party insurance being in force is a penal offence. The legislature was also faced with another problem. The insurance policy might provide for liability walled in by conditions which may be specified in the contract of policy. In order to make the protection real, the legislature has also provided that the judgment obtained shall not be defeated by the incorporation of exclusion clauses other than those authorised