FA/166/1985 1/8 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 166 of 1985 For Approval and Signature: HONOURABLE MR.JUSTICE R.S.GARG ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= UNITED INDIA INS. CO. LTD. - Appellant(s) Versus CHEMAR DAHYABHAI CHUNTHABHAI & 2 - Defendant(s) ========================================================= Appearance : MR SUNIL B PARIKH for MR HASMUKH THAKKER for Appellant(s) : 1, None for Respondent(s) : 1, Nonen for Respondent(s) : 2 - 3. ========================================================= CORAM : HONOURABLE MR.JUSTICE R.S.GARG Date : 30/07/2007 ORAL JUDGMENT Shri S.B. Parikh, learned counsel under the authority of Shri Hasmukh Thakkar for the appellant; none for the respondents. Heard. FA/166/1985 2/8 JUDGMENT 2. Learned Tribunal has made an award in M.A.C.Petition No. 535/81 on 18.6.84. Being aggrieved by the said award, the Insurance Company is before this Court with a submission that the learned Tribunal was unjustified in holding the Insurance Company liable in view of the fact that the respondent no.2 Patel Nathabhai Hargovinddas did not possess a valid license. 3. In the matter of the National Insurance Company Ltd. v. Swaran Singh and others, reported in 2004 [1] Accidents Claims Journal 1, the Supreme Court has made certain observations. Summary of the findings in para-102 of its judgment, is as under:- “(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to FA/166/1985 3/8 JUDGMENT be so interpreted as to effectuate the said object. (ii) Insurer is entitled to raise a defence in a claim petition filed under Section 163-A 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 driver or invalid driving license 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 license or disqualification of the driver for driving 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 vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time (iv) The insurance companies are, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish 'breach' on the part of the FA/166/1985 4/8 JUDGMENT owner of the vehicle; the burden of proof wherefore would be on them. (v) The court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstances of each case. (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 license by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches on the condition of driving license 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. (vii) The question as to whether the owner has taken reasonable care to find out as to whether the driving license produced by the driver, (a fake one or otherwise), does not fulfill the requirements of law or not will have to be determined in each case. (viii) If a vehicle at the time of accident was driven by a person having a learner's license, the insurance companies would be FA/166/1985 5/8 JUDGMENT liable to satisfy the decree. (ix) The claims tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third party arising in use of motor vehicle. The said power of the tribunal is not restricted to decide the claims interse between claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defence or defences to the insurer, the Tribunal has necessarily the power and jurisdiction to decide disputes inter se between insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and the award made thereon is enforceable and executable in the same manner as provided in Section 174 of the Act for enforcement and execution of the award in favour of the claimants. (x) Where on adjudication of the claim under the Act the tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of Sections FA/166/1985 6/8 JUDGMENT 149(2) read with sub-section (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the tribunal. Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the tribunal to the Collector in the same manner under Section 174 of the Act as arrears as land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by sub-section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the tribunal. (xi)The provisions contained in sub-section (4) with proviso thereunder and sub-section (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover amount paid under the contract of insurance on behalf of the insured can be taken recourse of by the Tribunal and be extended to claims and defences of insurer against insured by relegating them to the remedy before FA/166/1985 7/8 JUDGMENT regular court in cases where on given facts and circumstances adjudication of their claims inter se might delay the adjudication of the claims of the victims.” 4. From the above mentioned observations made by the Supreme Court, it would clearly appear that burden to prove that there was breach of policy conditions would be upon the Insurance Company, according to the Apex Court, breach of policy conditions, that is, disqualification of driver or invalid driving license 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 license are not in themselves defences available to the insurer against either the insured or the third parties. In the present case, but for producing a copy of the learning license, the Insurance Company did not summon the respondent no.1 to elucidate that whether he had a license or not. If the burden to prove was upon the Insurance Company, then, they were required to FA/166/1985 8/8 JUDGMENT summon the person who was driving the vehicle to prove that he did not possess the driving license. When the Insurance Company has failed in discharging its burden, then, the findings recorded by the Tribunal cannot be said to be bad. 5. I find no reason to interfere, the appeal deserves to and is accordingly dismissed. No costs. Interim relief, if any, is vacated. [R.S. GARG, J.] pirzada/-