IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA FAO (MVA) No. 224 of 1994 alongwith Cross Objections No. 173/1996 Date of Decision : August 19, 2009 Oriental Insurance Company Appellant Versus Darshna Kalia and others. Respondents Coram: Hon’ble Mr. Justice Sanjay Karol, Judge. Whether approved for reporting?1 Yes. For the appellant : Dr. Lalit Sharma, Advocate, for the appellant. For the respondents : Mr. Jagdish Thakur, Advocate, vice Mr. N. K. Thakur, Advocate, for respondent No. 1. Mr. Rakesh Dogra, Advocate, for respondent No. 2. Mr. Rahul Mahajan, Advocate, for respondent No. 3. Mr. Ankush Dass Sood, Advocate, for respondent No. 4. Sanjay Karol, J. (Oral) The insurer has filed the present appeal assailing the impugned award dated 18.4.1994 passed by the Motor Accident Claims Tribunal (3), Kangra at Dharamshala, H.P. in M.A.C.P. No. 7 of 1991, titled as Darshna Kalia versus Pawan Kumar and others awarding a compensation of Rs. 1,20,000/- in favour of the claimant on account of death of her son who died in a motor vehicle accident 1 Whether reports of Local Papers may be allowed to see the judgment? 2 which took place on 15.8.1990. The liability to pay the same has been fastened upon the insurer who alone has filed the present appeal. The owner of the vehicle as also the claimant have accepted the award. Permission under Section 170 of the Motor Vehicle Act, 1988 (hereinafter referred to as the Act) has not been accorded in favour of the appellant, hence the scope of the present appeal is narrow. Dr. Lalit Sharma, learned counsel for the insurer has assailed the impugned award on the ground that the vehicle in effect was being plied as a taxi and was hired by Sh. Pardeep Kumar son of the claimant. Keeping in view of the limitation as to use, since the policy did not cover use for hire and reward, material terms and conditions of the policy stood violated hence the insurer was not liable to indemnify the insured. The fact that the vehicle was insured has not been disputed. The claimant filed petition under Sections 140 and 166 of the Motor Vehicle Act, 1988 claiming compensation of Rs. 2 lacs against Sh. Pawan Kumar (driver), Sh. Mohinder Singh (registered owner), Smt. Mandip Kaur (transferee of the vehicle) and M/s Oriental Insurance Company Ltd. (insurer of the vehicle in question). In the claim petition it is specifically pleaded that the friends of the deceased had hired a taxi to travel from Jallundhar to Jawalamukhi in H.P. On way, due to the rash and negligent driving on the part of 3 Sh. Pawan Kumar the vehicle met with an accident as a result of which her son Sh. Pardeep Kumar died on the spot. In response thereto Sh. Mohinder Singh took up the defence that the vehicle in question actually stood sold and possession delivered to Ms. Mandip Kaur in the year 1989 and since the vehicle had been plied by the transferee she is responsible for the consequences of the accident. Smt. Mandip Kaur on the other hand objected to the petition on various grounds but specifically denied that the vehicle in question was used as a taxi. Her defence being that her father Sh. Iqbal Singh had given the vehicle to Sh. Raj Kumar Sahani for being taken to Jawalamukhi Temple in Himachal Pradesh. Importantly the insurer in its reply to para 14 and 24 of the petition specifically pleaded “that the replying respondent has no knowledge about the accident of the Car DHB-1214 which was being used as Taxi by the alleged owner of this vehicle”. It opposed the petition as the owner had no insurable interest and risk of the passengers in the Taxi was not covered as per premium paid. Based on the pleadings of the parties the Tribunal framed the issues and afforded opportunity to the parties to led evidence. Based on the material on record the Tribunal came to the conclusion that on 15.8.1990, accident took place due to rash and negligent driving of vehicle No. DHB-1214 by Sh. Pawan Kumar in which deceased Sh. Pardeep Kumar was travelling and died as a 4 result of the same. The claimant being legal representative and dependent was held entitled to compensation of Rs. 1,20,000/- on account of death of her son. The Tribunal found that the vehicle having been purchased by Smt. Mandip Kaur, Sh. Mohinder Singh the registered owner was not liable for any consequences and in any event since the vehicle in question was insured with the insurer in terms of policy Ext. R-1, the insurer was liable to have indemnified the insured. I have heard the learned counsel for the parties and also perused the record. The Apex Court in National Insurance Co. Ltd. versus Swaran Singh and others, (2004) 3 SCC 297 has held as under:- “The summary of our findings to the various issues as raised in these petitions are as follows: (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 be so interpreted as to effectuate the said object. (ii) An 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 licence of the driver, as 5 contained in sub-section (2)(a)(ii) of Section 149, has to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence 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 the 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 a duly licensed driver or one who was not disqualified to drive at the relevant time. (iv) The insurance companies, 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 owner of the vehicle; the burden of proof wherefor would be on them. (v) The court cannot lay down any criteria as to how the said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance 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 licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards the insured unless the said breach or breaches 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 6 policy conditions would apply "the rule of main purpose" and the concept of "fundamental breach" to allow defences available to the insurer under section 149(2) of the Act. …” Thus the burden to prove that the insured was guilty of negligence and had failed to exercise reasonable care in the matter of fulfilling the conditions of the policy regarding use of vehicle is heavy on the insurer. The insurer is also liable to establish available defence raised in the proceedings and breach of the terms and conditions of the policy on the part of the owner of the vehicle. In the present case it is not the defence of the insurer that the vehicle in question was being used as a taxi. In fact the insurer feigned ignorance about the vehicle being hired as taxi and the accident having taken place as alleged in the claim petition. Admittedly the insurer has not led any evidence (documentary or oral) to establish the breach of the terms and conditions of the policy. However the case as set up by the claimant needs to be considered and examined. In the claim petition the claimant has simply stated that “friends of Pardeep Kumar (son) had hired the vehicle”. Incidently the claimant’s witness Sh. Manoj Kumar (PW-4) who was the “friend” of Sh. Pardeep Kumar and also a co-passenger had specifically denied the suggestion put by the insurer that the vehicle was hired by him or deceased Sh. Pardeep Kumar for being taken to Jawalamukhi, H.P. from Jullandhar, Punjab. No doubt Smt. 7 Mandip Kaur has not stepped into the witness box to depose in support of her case but none the less this witness has substantially reiterated the version as taken by the owner in her pleadings. He has stated that the vehicle, in fact was taken by Sh. Raj Kumar from Sh. Iqbal Singh. The fact that Sh. Raj Kumar was friend of deceased Sh. Pardeep Kumar also stands substantiated by the claimant who deposed as PW-3. Importantly this witness in her examination in chief has not deposed anything with regard to the vehicle being deployed or hired as taxi. It is only when the insurer cross examined her that she made a bald statement to the effect that “It is correct that the boys who were there at the time of the accident have told me about the accident. And all these facts have been told to my lawyer. It is correct that they told me that car was taken on hire”. Importantly she does not disclose the name of the person who had disclosed to her the factum of the vehicle being engaged on hire. In any event, her testimony to this effect, as has been canvassed by Mr. Ankush Dass Sood, learned counsel for the owner, is mere hearsay and cannot be relied upon. [J. D. Jain versus The Management of State Bank of India and another, AIR 1982 Supreme Court 673] The same has not been corroborated or substantiated by any other corroborative or contemporaneous material on record hence same cannot be considered for holding that the vehicle was actually used as taxi and taken on hire. 8 Dr. Lalit Sharma, learned counsel has invited my attention to the contents of the F.I.R. dated 15.8.1990 registered with Police Station Dehra, Ext.PW2/A to contend that the contents of the F.I.R. evidently make it clear that the vehicle in fact was hired for a sum of Rs. 400/-. He has referred to and relied upon the decision of the Apex Court in National Insurance Company Limited versus Rattani and others, (2009) 2 SCC 75 to contend that since the claimant herself had produced on record the F.I.R. the same could be used as material piece of evidence to establish the factum of the vehicle having been put to use in violation of the terms and conditions of the policy. The Apex Court in Rattani (supra) was dealing with the case where the claimant herself had specifically pleaded that the manner in which the accident took place was elaborately narrated in the F.I.R. hence the contents of the same be read as part of her petition. It was in this background that the Apex Court held that having specifically stated that the contents of the F.I.R. be read as part of her pleadings the claimant could not be permitted to wriggle out of the same. While holding so the Court specifically observed that ordinarily an allegation made in the F.I.R. would not be admissible in evidence per se. The reliance on the aforesaid decision thus in the facts of the present case is unwarranted. Further Sh. Kishori Lal (PW-2), Constable, P.S. Dehra who exhibited F.I.R. Ext.PW2/A has simply exhibited the document. He 9 is neither the author nor the complainant on the basis of which the said F.I.R. was registered. The F.I.R. was infact registered on the complaint of one Sh. Tralochan Singh. He has not been examined at all. The insurer could have atleast made an attempt to examine the said witness to prove the contents thereof. Further none of the witnesses have deposed with regard to the outcome of the investigation carried out pursuant to the registration of the F.I.R. Hence the contents thereof cannot be relied upon and made basis for concluding that the vehicle in question was being used as a taxi or that it had been taken on hire and the material terms and conditions of the policy stood breached. The burden to prove violation or the breach on the part of the owner of the vehicle, in this case does not stand discharged by the insurer. From the insurance policy Ext. R-1, it is evident that premium for liability towards third party plus driver was charged by the insurer. The insurer has also charged premium towards liability to public risk. Admittedly the vehicle was a private car and had seating capacity of five passengers. It is not the case of the insurer that the persons more than the authorised seating capacity were travelling in the vehicle at the time of the accident. From the evidence it is evident that the deceased Sh. Pardeep Kumar was known to Sh. Raj Kumar who in turn was known to Sh. Iqbal Singh, father of the owner. Sh. Manoj Kumar (PW-4) has 10 categorically deposed that the vehicle in question was in fact taken by Sh. Raj Kumar from Sh. Iqbal Singh in order to travel to Jawalamukhi. Thus the deceased and PW-4 were not travelling in the vehicle as a gratuitous passenger. There is a difference between the passengers travelling in a vehicle as gratuitous passenger and the vehicle in question being used as gratuitously borrowed. While dealing with almost similar circumstance the Bombay High Court in Chandrakant Parsekar versus Rosy Simoes and another, 1995 ACJ 767 took a view that where a vehicle which was borrowed and used for undertaking a journey having met with an accident on its way, cannot be said to have been taken or used on hire. The Court after considering the principles laid down in Smith versus Littlewoods Organisation Ltd., (1987) 1 All ER 710 held that the relationship between lender and the borrower of the vehicle was that of gratuitous lender of the vehicle to a friend. Reliance upon the ratio of law laid down by the Apex Court in United India Insurance Co. Ltd., Shimla versus Tilak Singh and others, (2006) 4 SCC 404 by Dr. Lalit Sharma, learned counsel is misconceived. The facts being totally different the ratio is inapplicable. In the present case the deceased, by no stretch of imagination cannot be said and held to be a gratuitous passenger. For the aforesaid reasons the present appeal being devoid of any merit is dismissed. 11 Cross Objections not pressed keeping in view the subsequent change in the position of law. (Sanjay Karol), Judge. August 19, 2009 (PK)