1 IN THE HIGH COURT OF BOMBAY AT GOA FIRST APPEAL NO.67 OF 2004 The National Insurance Co. Ltd. having its Divisional Office at Diamond Chambers, 18th June Road, Panaji-Goa. …. Appellants V/s 1. Smt. Baby Shirpati Sutar, aged 54 years. W/o. Shirpati Balu Sutar, House No. Mukkam Post Sonyachi, Siroli Taluka, Radhanagari, District Kholapur, Maharashtra. 2. Joaquim Pereira, House No.455, Muddi Waddo, Saligao, Bardez-Goa. 3. Rajesh D. Verlekar, House No.54, Barros Waddo, Sangolda, Bardez-Goa. …. Respondents Mr. E. Afonso, Advocate for the appellants. Ms. M. Conception, Advocate for the Respondent No.1. CORAM : F.M. REIS, J. DATE : 2ND DECEMBER, 2010 JUDGMENT : The above appeal challenges the judgment and award dated 18/12/2003 passed by the learned Presiding Officer of the Motor Accident Claims Tribunal at Panaji in Claim Petition No.15/1995. 2 2. It is the case of the respondent no.1 that on 2/09/1994, at about 7.00 p.m., the son of the claimant Shri Ashok Shirpati Sutar (since deceased) was proceeding from Saligao to Calangute on his cycle on the left side of the road and when he reached the Mathardi Police Station, the respondent no.2 rode his scooter in a rash and negligent manner and on the wrong side of the road and caused the accident. It is the contention of respondent no.2 in the written statement that he was riding his scooter with due care and attention and was observing all the traffic rules and that the accident occurred due to negligent riding of the bicycle of the deceased. The respondent no.3 also disputed the claim of the respondent no.1. The appellants took the plea in their written statement that the respondent no.2 was not holding a licence to drive the motorcycle and, as such, there was a breach of the specified policy conditions excluding driving by any person who is not duly licensed. 3. The learned Tribunal after recording of evidence and hearing the parties came to the conclusion that the respondent no.1 had established that on 2/09/1992 their son was riding the cycle and that the respondent no.2 was driving the motorcycle in a rash and negligent manner on the wrong side of the road, which resulted in 3 the death of the said Ashok. The Tribunal further held that the respondent no.1 was entitled for a compensation of Rs.1 lac together with interest thereon. As far as the contention of the appellants is concerned, the Tribunal came to the conclusion that the appellants had failed to establish that at the relevant time the respondent no.2 was not duly licensed to drive the said vehicle and as such there was a breach of the conditions of the policy. 4. Being aggrieved by the judgment and award dated 18/12/2003, the appellants who is respondent no.3 before the learned Tribunal preferred the present appeal. 5. The learned Counsel Mr. E. Afonso, appearing for the appellants has assailed the impugned judgment and submitted that the Tribunal has erroneously come to the conclusion that the the appellants have failed to establish the breach of the terms of policy. The learned Counsel further submitted that the appellants had examined the Officials from the Transport Department who had categorically stated that respondent no.2 was not holding the licence to ride a motorcycle. The learned Counsel further submitted that the inference drawn by the Tribunal to the effect that respondent no.2 could hold a licence to ride a motorcycle from any 4 other State is totally misplaced. The learned Counsel further submitted that once it is established that respondent no.2 did not hold a licence to ride a motorcycle, the appellants were exonerated from effecting any payment towards the compensation. The learned Counsel further submitted that the question of directing the appellants to pay the amount and recover the same from the owner and the driver would not arise at all in view of the judgment of the Apex Court reported in the case of National Insurance Company Limited V/s. Parvathneni & Anr. (2009 (8) SCC 785) wherein the Apex Court had doubted its directions to that effect and referred the matter to a larger Bench. Learned Counsel has also relied upon the judgment of Aurangabad Bench of this Court passed in First Appeal No.827/2006 dated 4/08/2007 in the case of United India Insurance Co. Ltd. V/s. Anubai Gopichand Thakare & Ors. Learned Counsel, as such, submitted that the impugned judgment deserves to be quashed and set aside. 6. On the other hand, Ms. M. Conception, the learned Counsel appearing for respondent no.1 has supported the impugned judgment. The leaned Counsel submitted that the burden to establish the breach of the conditions of the policy is on the appellants and, as such, considering that the said burden was not 5 discharged, the question of this Court coming to the conclusion that there was any breach of policy would not arise at all. Learned Counsel further submitted that in any event even in case this Court comes to the conclusion that there was breach of policy, the appellants being the Insurance Company and the respondent no.1 being the third party, the Insurance Company should be directed to effect the payment of compensation and reserving their right to recover the said amount from the owner and the driver who are the respondents nos.2 & 3, herein. 7. Having heard the learned Counsel and on perusal of the record, the first point for consideration is as to whether the appellants have established the breach of the terms of the policy. It is admitted fact that no licence has been produced on record to establish that the respondent no.2 was duly authorized to ride a motorcycle. The Tribunal whiles deciding issue no.6 has relied upon the statement in the cross-examination of RW1 to the effect that in case the licence is issued by any other State Transport Authority then their Department is not communicated about it. The Tribunal, as such, held that the possibility of the respondent no.2 having licence issued by some other licensing authority cannot be totally ruled out. On such basis, the Tribunal came to the 6 conclusion that it was not possible to hold that the respondent no.2 was not holding a valid driving licence. On perusal of the evidence of RW1 from the Transport Department, he has stated that as per the record one Joaquim Pereira who is respondent no.2 herein was having a driving licence to drive light motor vehicle. As per the records, the person by name Joaquim Pereira was holding licence bearing no.GA-42424 for the period from 28/02/1986 to 27/02/1989. Thereafter, the licence was renewed from 16/11/1989 to 15/11/1992 and thereafter from 19/01/1994 to 18/01/1997 and thereafter from 3/03/1997 to 2/03/2000. He has further stated that the records maintained by the Department show that the said Joaquim Pereira did not hold a driving licence to drive two wheelers and that the licence for light motor vehicles did not authorize any person to drive a two wheeler. The said respondent no.2 chose not to conduct the cross-examination of the said witness. On the basis of the said evidence on record, it reveals that the respondent no.2 did not hold a licence to ride a motorcycle from the Transport Department in the State of Goa. The respondent no.2 also did not choose to confront the said witness with any licence from any other State to establish that he was holding a valid licence to ride a motorcycle at the relevant time. It is not the case of any of the parties that the place of residence of 7 respondent no.2 had been shifted to any other State. As such, it was not open for the Tribunal on the basis of the said statement in the cross-examination to come to the conclusion that the respondent no.2 could hold a licence to ride a motorcycle from any other State. It is not expected of the appellants/Insurance Company to scan the licences of the Transport Departments in all the States to ascertain as to whether the rider of the motorcycle was not holding a proper licence at the time of the accident. The inference, as such, drawn by the Tribunal to that effect is misplaced. As such, on the basis of the evidence on record, considering that the respondent no.2 failed to challenge the statements of RW1 to the effect that he was not holding a licence to ride a motorcycle, this itself establishes that in fact respondent no.2 did not hold a driving licence to ride a motorcycle at the relevant time. 8. The Apex Court in the in the judgment reported in the case of Oriental Insurance Company V/s. Zaharulnisha & Ors. (2008 (12) SCC 385) has held at paras 18 and 21 thus: 18. A three-Judge Bench of this Court in National Insurance Co. Ltd. v/s. Swaran Singh has extensively dealt with the meaning, application and interpretation of various provisions, including Sections 3(2), 4(3), 10(2) and 149 of the MV Act. In para 47 of the judgment, the learned Judges have held that if a person has been given a licence for a particular type of vehicle as specified therein, he cannot be said to have no licence for driving another type of vehicle which is of the same category but of different type. As for example, when a person is 8 granted a licence for driving a light motor vehicle he can drive either a car or a jeep and it is not necessary that he must have driving licence both for car and jeep separately. In para 48, it is held as under: “48. Furthermore, the insurance company with a view to avoid its liabilities is not only required to show that the conditions laid down under Section 149(2)(a) or (b) are satisfied but is further required to establish that there has been a breach on the part of the insured. By reason of the provisions contained in the 1988 Act, a more extensive remedy has been conferred upon those who have obtained judgment against the user of a vehicle and after a certificate of insurance is delivered in terms of Section 147(3). After a third party has obtained a judgment against any person insured by the policy in respect of a liability required to be covered by Section 145, the same must be satisfied by the insurer, notwithstanding that the insurer may be entitled to avoid or to cancel the policy or may in fact have done so. The same obligation applies in respect of a judgment against a person not insured by the policy in respect of such a liability, but who would have been covered if the policy had covered the liability of all persons, except that in respect of liability for death or bodily injury.” 21. In the light of the above settled proposition of law, the appellants Insurance Company cannot be held liable to pay the amount of compensation to the claimants for the cause of death of Shukurullah in road accident which had occurred due to rash and negligent driving of scooter by Ram Surat who admittedly had no valid and effective licence to drive the vehicle on the day of accident. The scooterist was possessing a driving licence of driving HMV and he was driving a totally different class of vehicle, which act of his is in violation of Section 10(2) of the MV Act. 9. Considering the said judgment of the Apex Court it is evident that as the respondent no.2 did not hold a licence to ride a motorcycle, he did not have an effective valid licence at the relevant time which resulted in the breach of the terms of policy between the appellants and the respondent no.3 herein which can absolve the appellants of their liability to pay the compensation. 9 To that extent, the impugned award cannot be sustained. 10. Dealing with the next contention of the learned Counsel appearing for the appellants to the effect that appellants cannot be directed to make the payment and recover the amount of compensation from the respondents nos.2 & 3, I find that this Court in the judgment reported in the case of United India Insurance Co. Ltd. V/s. Sindhubai Kondiram Darwante & Ors. (2010 (4) Bom.C.R. 325) has held at paras 17,18,19,20,21,23,24,25,26,27 thus: 17. Thus, the Apex Court held that whenever the Tribunal passes an order of directing the insurer to pay compensation amount and thereafter to recover the same from the insured, the Tribunal exercises inherent power. At this stage, it will be necessary to consider a decision of the Apex Court in the case of Oriental Insurance Company Limited Vs. Raj Kumari & ors., 2007 DGLS (soft) 1158 : A.I.R. 2008 S.C. 403. This was a case where the Tribunal allowed the claim application by granting compensation of Rs. 1,40,000/- but restricted the liability of the insurer to Rs. 50,000/-. An appeal was preferred against the said award before the High Court. The High Court held that the entire amount will have to be paid by the insurer and the amount paid in excess of Rs. 50,000/- by the insurer will have to be recovered from the insured. The said award was challenged by the Insurer before the Apex Court. The Apex Court discussed the law relating to precedents and in Paragraph 16, the Apex Court held thus: “16. In the instant case the insurer was a private limited company doing transport business. There was no material placed before the High Court to show that the 10 claimants would have any difficulty in recovering the awarded amount from it. That being so, the High Court's order is modified to the extent that the insurer shall pay an amount of Rs. 50,000/- with interest awarded to claimants. The balance has to be paid by the insured.” 18. At this stage, a reference will have to be made to certain decisions of this Court. In the case of (United India Insurance Company Limited Vs. Kamal Maruti Darekar & ors.)10, 2007(6) Bom.C.R. 752(A.B.) : 2007(6) All.M.R. 392, this Court had occasion to consider the question whether the insurer can be directed to deposit the amount of compensation though a defence under section 149(2) of the said Act of 1988 was proved by the Insurer. This Court relied upon a decision of the Apex Court in the case of (National Insurance Company Limited Vs. Swaran Singh)11, 2004(5) Bom.C.R. 467(S.C.) : 2004(3) S.C.C. 297. After considering the said decision, in Paragraph 16, this Court held thus: “16. From the above observations, it is amply clear that the insurer may legally establish defence to avoid liability and cannot be held jointly liable to pay compensation amount to the claimants, if such defence is duly proved within the meaning of section 149(2), but even in such a case the insurer is statutorily liable to satisfy the award in the first instance qua the claimants, who are third parties. In view of the fact that special protection is made available to third parties under statutory provisions of the Motor Vehicles Act, third parties are not concerned with terms of the contract between insurer and insured. They cannot be, therefore, denied fruits of the award rendered by the Tribunal and cannot be compelled to seek recovery only from the owner of the vehicle, due to absence of legal liability of the insurer or on account of faults committed by the insured.” (emphasis added) 19. Similar view has been taken by this Court in the case of (United India Insurance Company Limited Vs. Branch Office at Rial Toly & ors.)12, 2008(4) Bom.C.R. 851. This Court relied upon a decision of three Judge Bench of the Apex Court in the case of (National 11 Insurance Co. Ltd. Vs. Baljit Kaur)13, 2004(2) S.C.C. 1. 20. Learned Counsel appearing for the appellant has placed reliance on an unreported judgment of a Division Bench of this Court in LPA No. 121 of 2000. After considering the law on this aspect in paragraph 65, the Division Bench held thus: “65. The question which arises is what is the effect of section 96(3) and (4) of the said Act and section 149(4) and (5) of the Motor Vehicles Act, 1988. Can it be said that because of these provisions, the insurance company can be compelled to make payment of the awarded amount and recover it from the insured in all cases ? We have carefully considered these provisions. On the basis of these provisions, we are unable to lay down a broad proposition that in all cases, the insurer must be made to pay the entire compensation amount and then recover it from the owner of the offending vehicle.” 21. In the case of National Insurance Co. Ltd. Vs. Swaran Singh, 2004(5) Bom.C.R. 467(S.C.) : 2004(3) S.C.C. 297, Apex Court dealt with the said question. In paragraph 104 of the decision it was held thus: 104. It is, therefore, evident from the discussions made hereinbefore that the liability of the insurance company to satisfy the decree at the first instance and to recover the awarded amount from the owner or driver thereof has been holding the field for a long time. 105. Apart from the reasons stated hereinbefore, the doctrine of stare decisis persuades us not to deviate from the said principle. 106. It is a well settled Rule of law and should not ordinarily be deviated from. See (Bengal Immunity Co. Ltd. Vs. State of Bihar)14, 1955 DGLS (soft) 51 : 1955(2) S.C.R. 603 : A.I.R. 1955 S.C. 661, (Keshav Mills Co. Ltd. Vs. CIT)15, 1965 DGLS (soft) 23 : 1965(2) S.C.R. 908 : A.I.R. 1965 S.C. 1636, (Union of India Vs. Raghubir Singh)16, 1989 DGLS (soft) 327 : 1989(3) S.C.R. 316 : 1989(2) S.C.C. 754, (Gannon Dunkerley and Co. Vs. State of Rajasthan)17, 1992 12 DGLS (soft) 775 : 1993(1) S.C.C. 364; (Belgaum Gardeners Coop. Production Supply and Sale Society Ltd. Vs. State of Karnataka)18, 1992 DGLS (soft) 329 : 1993 Supp.(1) S.C.C. 96 and (Hanumantappa Krishnappa Mantur Vs. State of Karnataka)19, 1991 DGLS (soft) 532 : 1992 (Supp. 2) S.C.C. 213. 107. We may, however, hasten to add that the Tribunal and the Court must, however, exercise their jurisdiction to issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued, despite arriving at a finding of fact to the effect that the insurer has been able to establish that the insured has committed a breach of contract of insurance as envisaged under sub-clause (ii) of Clause (a) of sub-section (2) of section 149 of the Act, the insurance company shall be entitled to realise the awarded amount from the owner or driver of the vehicle, as the case may be, in execution of the same award having regard to the provisions of sections 165 and 168 of the Act. However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it had not been able to do so, the insurance company may initiate a separate action therefor against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given an opportunity to defend at all. Such a course of action may also be resorted to when a fraud or collusion between the victim and the owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage. (emphasis added) 23. Lastly a reference will have to be made to a recent order of the Apex Court in the case of National Insurance Company Limited Vs. Parvatheneni and anr. (supra). In paragraph 4 of the said decision, the Apex Court observed thus : “4. No doubt, there are some decisions which have taken the view that even if the insurance company has no 13 liability, yet it must pay and later on recover it from the owner of the vehicle. See for example (National Insurance Co. Ltd. Vs. Yellamma)20, 2008 DGLS (soft) 589 : (2008)7 S.C.C. 526, (Samundra Devi Vs. Narendra Kaur)21, 2008 DGLS (soft) 891 : (2008)9 S.C.C. 100 vide S.C.C. 104, para 16), (Oriental Insurance Co. Ltd. Vs. Brij Mohan)22, 2007 DGLS (soft) 594 : (2007)7 S.C.C. 56 vide S.C.C. 64, para 13 and (New India Insurance Co. Vs. Darshana Devi)23, 2008 DGLS (soft) 182 : (2008)7 S.C.C. 416 vide S.C.C. 424, para 21, etc. We have some reservations about the correctness of the aforesaid decisions of this Court.” 24. These observations were made after recording a prima facie view in paragraph 3 which reads thus: “3. Prima facie, we are of the opinion if the Insurance Company proves that it has no liability to pay compensation to the claimants, the Insurance Company cannot be compelled to make payment and later on recover it from the owner of the vehicle.” 25. In paragraph 7, the Apex Court issued following directions. “7. Hence, we direct that the papers of this case be placed before the Hon'ble the Chief Justice of India for constituting a larger Bench to decide the following questions: (1) If an insurance company can prove that it does not have any liability to pay any amount in law to the claimants under the Motor Vehicles Act or any other enactment, can the Court yet compel it to pay the amount in question giving it liberty to later on recover the same from the owner of the vehicle ? (2) Can such a direction be given under Article 142 of the Constitution, and what is the scope of Article 142 ? Does Article 142 permit the Court to create a liability where there is none ?” 26. It must be stated that there are at least two 14 decisions of a Bench of three Hon'ble Judges of the Apex Court taking a view that in a case where breach of policy condition was established in a claim by third party, a direction can be issued by against the Insurer to deposit compensation amount and thereafter to recover the same from the Insured by executing the said award. In fact, in the said case of National Insurance Company Limited Vs. Parvathneni & anr. (supra), the Apex Court has referred to at least four such decisions taking a view that the insurer can be directed to deposit first and thereafter recover from the Insured. However, a doubt has been expressed regarding correctness of the aforesaid decisions of the Apex Court and a reference has been made to a larger Bench. However, the view taken in the decision of larger Bench in the case of Swaran Singh (supra) still holds the field. The Division Bench of this Court in LPA No. 121 of 2000 has observed that the Bench was unable to lay down a broad proposition that in all cases, the insurer must be made to pay the entire compensation amount and then recover it from the owner of the offending vehicle. It is true that in all the cases where the insurer is held not liable, such a course cannot be adopted. It will depend on the facts and circumstances of each case. 27. Therefore, as the legal position stands today, there is a power vesting in Tribunal and in this Court, depending upon the facts and circumstances of each case, to direct the insurer to pay compensation amount and thereafter to recover the same from the insured. 11. Considering the view taken in the said judgment of the Apex Court, after taking note of the judgments of the Apex Court and the Division Bench of this Court, the judgment of the learned Single Judge passed by Aurangabad Bench of this Court in First Appeal No.827/2006 would not be applicable in the circumstances of this case. The judgment relied upon by the learned