THE HON’BLE SRI JUSTICE K.S.APPA RAO M.A.C.M.A. No. 1801 of 2008 DATE: 18-03-2011 Between: The United India Insurance Company Ltd., .. Appellant And Donthagani Gangamma and 4 others .. Respondents THE HON’BLE SRI JUSTICE K.S.APPA RAO M.A.C.M.A. No. 1801 of 2008 JUDGMENT: Being aggrieved by the order and decree dated 26.03.2008 passed in O.P.No.977 of 2005 on the file of the Motor Accidents Claims Tribunal-cum-I Additional District Judge, Nalgonda, the present Civil Miscellaneous Appeal is filed. The petitioners-claimants filed the O.P. No.977 of 2005 claiming compensation of Rs.2,50,000/- for the death of the deceased Shivaiah in a motor vehicle accident. The factum of accident was not disputed. It is the contention of the Insurance Company i.e. respondent No.2 from the beginning that as per the Motor Vehicle Inspector’s Report, the auto in question was not having fitness certificate and the driver of the offending auto had no valid driving licence at the time of the accident. While discharging the burden, the Insurance Company examined R.W.1 Sri M.C.Balaji, Senior Legal Assistant in R-2 company. The chief examination affidavit clearly reads that the offending auto bearing No.AP 24 U 2360 was insured with the insurance company for the period from 30.12.2004 to 29.12.2005 and as per Ex.A-5 Motor Vehicle Inspector’s report, the auto did not have fitness certificate and the driver of the auto was not having driving licence. The evidence of R.W.1 remained unchallenged in view of the documentary evidence Ex.A-5. Now the point for consideration is whether the insurance company is liable to indemnify the compensation payable as directed by the lower Court? The lower Court placed reliance on a decision reported in the case of UNITED INDIA INSURANCE COMPANY LIMITED vs. LEHRU AND OTHERS[1] held that in a case of fake driving licence the insurance company would continue to remain liable unless the true owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive. The lower Court interpreted the observations of the Bench and noted that the insurance company would remain liable to innocent third party and it may recover from the insured. Learned counsel appearing for the appellant drawn the attention of the Court to the decision reported in the case of SARDARI vs. SUSHIL KUMAR[2] of the Apex Court dated 04.03.2008 in particular paragraph-7 of the judgment, which is as under: “The concurrent finding of fact herein is that Sushil Kumar never held a license. The owner of the vehicle has a statutory obligation to see that the driver of the vehicle whom he authorized to drive the same holds a valid license. Here again, a visible distinction may be noticed, viz. where the license is fake and a case where the license has expired, although initially when the driver was appointed, he had a valid license.” In the present case on hand, admittedly, as per Ex.A-5 the offending auto had no valid permit as on the date of accident and its driver had also not having valid driving licence. These two are the violations of the policy relating to the offending vehicle in question. When the statutory obligation to see that the driver of the vehicle had valid driving licence at the time of the accident, the same was violated. Therefore, in any view of the matter, the finding of the lower Court fastening liability on the insurance company alone is not justified having regard to the facts and circumstances of the case. Admittedly, the deceased is a third party travelling in the offending auto at the time of the accident. If that being the case, the claimants are entitled for compensation for the death of the deceased. Admittedly, the offending vehicle had valid insurance coverage against the risk of third parties. Therefore, by taking into consideration of the judgment reported in the case of NATIONAL INSURANCE CO. LTD. vs. CHALLA BHARATHAMMA AND OTHERS[3], the insurance company has at the first instance to deposit the compensation amount and recover the same from the insured by initiating the proceedings before the executing Court, it need not file a separate suit. In the aforesaid case the insurer resisted the claim on the ground that the insured had not obtained permit to ply the vehicle and, therefore, in terms of policy of insurance, the insurer had no liability. The lower Tribunal accepted the plea. The High Court held that the insurer was liable to indemnify the award. It was of the view that since there was no permit, the question of violation of any condition thereof does not arise. The view is clearly fallacious. A person without permit to ply the vehicle cannot be placed at a better pedestal vis-à-vis one who has a permit but he has violated any condition thereof. The Apex Court while considering the facts and circumstances in the said case, considering the beneficial objective of the Act, it would proper for the insurer to satisfy the award, though in law it has no liability. While following the dictum and the guidelines enunciated thereunder and by applying the same principle in the present case, it would be proper for the insurer in this case to satisfy the award, though in law it has no liability. For the purpose of recovering the amount paid from the owner, the insurer shall not be required to file a suit. It may initiate a proceeding before the concerned executing court as if the dispute between the insurer and the owner was the subject matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. Before release of the amount to the claimants, owner of the offending vehicle shall furnish security for the entire amount which the insurer will pay to the claimants. The offending vehicle shall be attached, as a part of the security. If necessity arises the executing court shall take assistance of the concerned Regional Transport Authority. The executing Court shall pass appropriate orders in accordance with law as to the manner in which the owner of the vehicle shall make payment to the insurer. In case there is any default it shall be open to the executing Court to direct realization by disposal of the securities to be furnished or from any other property or properties of the owner of the vehicle, i.e., the insured. With the above observation, the Civil Miscellaneous Appeal is allowed. ___________________ K.S.APPA RAO, J 18-03-2011 MR THE HON’BLE SRI JUSTICE K.S.APPA RAO M.A.C.M.A. No. 1801 of 2008 DATE: 18-03-2011 MR [1] 2003(5) Supreme Reported Judgments 351 [2] 2008 ACJ 1307 [3] 2004 ACJ 2094