IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA. FAO No. 337 of 2009 Date of Decision : October 27, 2009 Sushil Kumar …Appellant. Versus: Ramesh Chand & Ors. …Respondents. Coram: The Hon’ble Mr.Justice Sanjay Karol, Judge. Whether approved for reporting?1 Yes For the appellant : Mr. Vikas Rathore, Advocate. For respondents 1 & 2: Mr. A. K. Vashista, Advocate. For respondent 3: Ms. Anjali Soni Verma, Advocate. For respondent 4: Mr. J. S. Bagga, Advocate. Sanjay Karol, J. (Oral) The owner has assailed the impugned award dated 30.4.2009 passed by the Motor Accident Claims Tribunal(I), Kangra at Dharamshala, H.P. in M.A.C.P. No. 51-K/II-2006, titled as Ramesh Chand & Anr. vs. Guljar & Ors., for the reason that the Tribunal erred in holding that the insurer of the vehicle was not liable to indemnify the insured and pay the compensation to the claimants. The challenge in the present appeal is limited to the findings returned by the Tribunal on Issues No.4 & 5. 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 Brief facts necessary for adjudication of the present appeal thus are as under; The claimants being respondents No.1 & 2 herein, filed a claim petition under Section 166 of the Motor Vehicles Act, 1988 (hereinafter referred to as ‘the Act’), pleading that their son Shri Kamal Kumar died in a road accident on 20.2.2006. The accident occurred due to the rash and negligent driving on the part of Shri Gulzar (respondent No.3 herein), who was driving truck bearing Registration No. HP-37-8112 owned by Shri Sushil Kumar (appellant herein), in a rash and negligent manner. The deceased was travelling as a pillion rider on Motorcycle No.PB-10-BP-8135, which was hit by the said truck. The owner and the driver of the truck, while denying negligence on the part of the driver pleaded negligence on the part of the driver of the motor cycle and opposed the petition as such. The insurer of the truck being M/s. Oriental Insurance Company (respondent No.4 herein), opposed the petition by filing its separate reply, inter alia pleading that the driver of the truck was not holding a valid and effective driving licence at the time of the accident, thus violating the material terms and conditions of the Insurance Policy, as such the insurer was not liable to indemnify the insured and pay the compensation. Based on the pleadings of the parties, the Tribunal framed the following issues:- 3 “1. Whether Kamal Kumar died due to rash and negligent driving of Truck No.HP-37-8112 by respondent No.1? ………..OPP 2. If issue No.1 is proved in affirmative, to what amount of compensation the petitioners are entitled to and from whom? …….O.P. Parties 3. Whether the petition is bad for non-joinder of necessary parties, as alleged? …....OPR 1 to 3 4. Whether respondent No.1 was not holding a valid and effective driving licence at the time of accident? …....OPR-3 5. Whether the vehicle in question was being driven in contravention of the terms and conditions of insurance policy? ….OPR-3 6. Relief.” Opportunity to lead evidence was afforded to the parties and appreciating the material on record, the Tribunal found that the deceased Shri Kamal Kumar had died due to the rash and negligent driving on the part of Shri Gulzar Singh, who was driving the truck in question. The claimants being the legal heirs of the deceased were held entitled to compensation of an amount of Rs.4,43,000/-. While deciding issues No. 4 & 5, the Tribunal found that the evidence of Shri Rathindra Mohan Goswami (RW-3) proved that no driving licence was issued in the name of Shri Gulzar Singh by the licencing authority at Gauhati, Assam, hence the original licence being fake, the renewal thereof at Dharamshala (H.P.) would not transform a fake licence into a genuine one. The Court based its decisions on the ratio of law laid down by the Apex Court in National Insurance Company 4 Limited v. Geeta Bhat & Ors. (2008) 12 SCC 426 and New India Assurance Co., vs. Kamla & Ors. (2001) 4 SCC 342. Thus, it was held that the insurer was not liable to indemnify the insured as material terms and conditions of the Insurance Policy (Ext.RW- 2/A) stood breached. The insurer, however was directed to pay the amount to the claimants insured and recover the same from the owner in accordance with law. I have heard the learned counsel for the parties and also perused the record. The findings returned by the Tribunal on issues No. 4 & 5 are reproduced in entirety as under:- “Issue No.4: 20. The submission of learned Advocate appearing on behalf of respondent No.3 that respondent No.1 was not holding valid and effective driving licence at the time of accident is accepted for the reasons hereinafter mentioned. It is proved on record that OLA-AS-01 DL/N/43711/198687 dated 10.10.1986 is fake licence and I of the view that renewal of licence will not transform the fake licence into genuine licence. See 2005 Curr. L.J. page 362 Supreme Court (DB) New India Insurance Company Shimla vs. Kamla and others where it is held that renewal of fake driving licence cannot transform fake licence as genuine licence. It was held that forgery being antithesis to legality cannot be violated. It was further held that in case there was breach of insurance policy condition on account of vehicle being driven without valid driving licence the insurer was held authorized to recover from insured vehicle owner the amount paid to third party. Also see 2008 Supreme Court Civil Reports 676 (DB) National 5 Insurance Company v. Geeta Bharat and others where it is held that insurer is legally entitled to recover the amount from the owner in respect of the amount awarded in favour of third party by the Tribunal. Hence it is held that driver/ respondent No.1 was not holding valid and effective driving licence at the time of accident and it is also held that renewal of fake licence will not transform the fake licence into genuine licence as per law. ISSUE No.5: 21. The submission of learned Advocate appearing on behalf of respondent No.3/insurance company that vehicle was driven in contravention of the terms and conditions of insurance policy is also accepted for the reasons hereinafter mentioned. It is proved on record that vehicle was driven in violation of the terms & conditions of insurance policy. As per condition of insurance policy Ex.RW-2/A placed on record, there is specific condition that person driving the vehicle should hold effective driving licence at the time of accident. I am of the view that terms and conditions mentioned in insurance policy are binding on the insurance company as well as the owner of the vehicle. It is proved on record that original licence was fake. RW-3 Rathindra Mohan Goswami has specifically stated in positive manner that no driving licence was issued in the name of Gulzar Singh on 10.10.1986 as mentioned in Ex.RW-1/A. Hence it is held that vehicle was driven in violation of the terms and conditions of insurance policy. Issue No.3 (sic) is decided in favour of respondent No.3.” In Kamla (supra), the Apex Court was dealing with a case where the Tribunal had wrongfully denied the opportunity to the insurer to prove that the driving licence held by the driver at the 6 time of the accident was forged/fake. It is in this background the Court held that what was originally a forgery would remain null and void for ever and it would not acquire legal validity at any time, by whatever process of sanctification subsequently done on it and that forgery is antithesis to legality and law cannot afford to validate a forgery. Having held so, the Court remitted the matter back to the Tribunal for adjudication of the question of liability by observing as under:- “25. The position can be summed up thus : The insurer and insured are bound by the conditions enumerated in the policy and the insurer is not liable to the insured if there is violation of any policy condition. But the insurer who is made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy conditions on account of the vehicle being driven without a valid licence. Learned counsel for the insured contended that it is enough if he establishes that he made all due enquiries and believed bona fide that the driver employed by him had a valid driving licence, in which case there was no breach of the policy condition. As we have not decided on that contention it is open to the insured to raise it before the Claims Tribunal. In the present case, if the Insurance Company succeeds in establishing that there was breach of the policy condition, the Claims Tribunal shall direct the insured to pay that amount to the insurer. In default the insurer shall be allowed to recover that amount (which the insurer is directed to pay to the claimants - third parties) from the insured person.” 7 The facts herein are totally different and the decision is not applicable as it is not the case of the insurer that adequate and fair opportunity to lead evidence was not afforded by the Tribunal. The insurer has led evidence which shall be subsequently considered and appreciated for the purposes of determining the question of liability. The Apex Court in United India Insurance Co. Ltd., v. Lehru & Ors. (2003) 3 SCC 338, in almost similar circumstances as are in hand, has held as under:- “20. When an owner is hiring a driver he will therefore have to check whether the driver has a driving licence. If the driver produces a driving licence which on the face of it looks genuine, the owner is not expected to find out whether the licence has in fact been issued by a competent authority or not. The owner would then take the test of the driver. If he finds that the driver is competent to drive the vehicle, he will hire the driver. We find it rather strange that Insurance Companies expect owners to make enquiries with RTO's, which are spread all over the country, whether the driving licence shown to them is valid or not. Thus where the owner has satisfied himself that the driver has a licence and is driving competently there would be no breach of Section 149(2)(a)(ii). The Insurance Company would not then be absolved of liability. If it ultimately turns out that the licence was fake the Insurance Company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still 8 permitted that person to drive. More importantly even in such a case the Insurance Company would remain liable to the innocent third party, but it may be able to recover from the insured. This is the law which has been laid down in Skandia's, Sohan Lal Passi's and Kamla's cases. We are in full agreement with the views expressed therein and see no reason to take a different view. AIR 1987 SC 1184, AIR 1996 SC 2627; 1996 AIR SCW 3271 and AIR 2001 SC 1419 : 2001 AIR SCW 1340” (Emphasis supplied) Importantly, it took into account the earlier decision rendered by the Apex Court in Kamla (supra) and observed that the question as to whether or not the insured would be protected if he had made all inquiries was left open in the said decision. Subsequently, in National Insurance Co. Ltd., vs. Swaran Singh & Ors. (2004) 3 SCC 297, the Apex Court while considering the ratio of law laid down both in Kamla (supra) and Lehru (supra), held that the defence to the effect that the licence held by the person driving the vehicle was a fake one, would be available to insurance companies, but whether despite the same, the plea of default on the part of the owner stands established or not, would be a question which would have to be determined in each case. It further held that “it will be for the insurer to prove that the insured did not take adequate care and caution to verify the genuineness or otherwise of the licence held by the driver.” In para-110 of the report it was held that “the summary of our findings to the various issues as raised in these petitions are as follows : 9 (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 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 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 toward insured, the insurer has to prove that the insurer was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the conditions 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 owner of the vehicle; the burden of proof wherefor would be on them. 10 (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 licence 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 licence 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 defence 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 licence produced by the driver, (a fake one or otherwise), does not fulfil the requirements of law or not will have to be determined in each case.” (Emphasis supplied) In Lal Chand vs. Oriental Insurance Co. Ltd., (2006) 7 SCC 318, the Apex Court had the occasion to again consider the ratio of law laid down in Kamla (supra), Lehru (supra) and Swaran Singh (supra). The Court was dealing with the case where the owner of the vehicle had established that not only had he seen and examined the driving licence produced by the driver but had also undertaken his driving test and found him to be competently driving the vehicle and only thereafter 11 appointed him as driver on the vehicle in question. In this background the Apex Court observed that there would be no breach of Section 149(2)(a)(ii) of the Act and the Insurance Company would not be absolved of its liability. The Apex Court in Oriental Insurance Co. Ltd., vs. Prithvi Raj (2008) 2 SCC 338, while dealing with the case of a claim of own damage, where there was enough evidence on record produced by the insurer clearly establishing that no driving licence had in fact been issued to the driver permitting and enabling him to drive the motor vehicle, held that the insurer was not liable to indemnify the insured. In the instant case, the claimants are not the owners of the vehicle but third parties hence, the ratio would not be applicable. This distinction stands noticed and made out by the Apex Court itself subsequently in Geeta Bhat (supra), wherein it observed that in Yallwwa v. National Insurance Co. Ltd., (2007) 6 SCC 657, this Court opined: (SCC p.666, para 24), the recent decisions of this Court are authorities for the proposition that the insurance company would not be liable in cases where passengers of a vehicle are not third parties.” Importantly, the Apex Court took into account the ratio laid down in Lehru (supra), Swaran Singh (supra) and held that “an owner of the vehicle is bound to make reasonable enquiry as to whether the person who is authorized to drive the vehicle holds a licence or not. Such a licence not only must be effective one 12 but should also be a valid one. It should be issued for driving a category of vehicle as specified in the Motor Vehicles Act and/or Rules framed thereunder. Indisputably, in a case where the terms of the contract of insurance are found to have been violated by the insured, the insurer may not be held to be liable for reimbursing the insured. So far as a driving licence of a professional driver is concerned, the owner of the vehicle, despite taking reasonable care, might have not been able to find out as to whether the licence was a fake one or not. He is not expected to verify the genuineness thereof from the Transport Offices.” (Emphasis supplied) In Geeta Bhat (supra), the Apex Court was dealing with a case where claimant Geeta Bhat had filed a petition claiming compensation on account of the death of Shri Ishwar Dutt Bhat. The insurer of the vehicle had brought on material record to the effect that on an investigation made out by the Investigator it was found that no licence had in fact been issued in the name of the driver of the vehicle. The Tribunal, based on the fact that the clerk originally summoned from the office of the Licencing Authority who had not appeared and deposed, as was sought to be done by the insurer, held that since the insurer had not led any evidence, it could not be said that it discharged the onus by proving that the driving licence possessed by the driver of the truck was a fake one. The High Court summarily dismissed the insurer’s appeal and thus the insurer came up before the 13 Supreme Court. Importantly, there the owner and the driver of the vehicle were ex-parte. Primarily dealing with the question of payment of compensation to the claimants being a third party, the Apex Court assumed that the licence possessed by the driver was fake and clarified that only because the same was fake, that by itself would not absolve the insurer to pay the amount awarded by the Tribunal. None was present on behalf of the owner and the driver to plead their case. Hence, in this background the Apex Court gave opportunity to the insurer to recover the amount from the owner in an appropriate proceedings in accordance with law. In Premkumari & Ors. vs. Prahlad Dev Ors. (2008) 3 SCC 193, the Apex Court in fact reiterated the ratio of law laid down in Swaran Singh (supra) & Lehru (supra) and in the facts before them, found that since the owner had not appeared to show the reasonable care and caution taken by him, the insurer was liable to recover the amount, after paying the same to the claimants from the insured. Now, in the instant case there is no dispute that the vehicle stood insured in terms of Insurance Policy (Ext.RW-2/A as also Ext. RX). There is also no dispute that the driving licence No. OLA-AS-01 DL/N/43711/1986-87 dated 10.10.1986 (Ext.RW-1/A) actually stood renewed by the RLA, Dharamshala in the name of Shri Gulzar Singh who himself appeared as RW-1 and deposed to the said effect. In his statement, he has clarified that prior to the renewal, the original licence had been issued by 14 the Licencing Authority, Kamrup, Gauhati and the same was also renewed from there earlier. Initially, he was possessing a licence to drive a medium motor vehicle and subsequently, after conduct of proper test the licence to drive heavy transport vehicle was issued in his favour. He has further clarified that at the time of his engagement, the owner had not only verified the licence but had also taken his driving test. In any event, the owner of the vehicle Shri Sushil Kumar (RW-2) also deposed that before employing RW-1 as driver on the vehicle in question he verified his driving licence from the RLA, Dharamshala and found the same to be valid and effective. He had also undertaken the driving test and found the driver to be competent to drive the truck. Not only that he had also verified the antecedents and the competence of the driver from his earlier employers i.e. Delhi Bangloor Carrier, Sanjay Gandhi Transport, New Delhi. His cross-examination does not render his statement to be doubtful. He has clarified that even though he had not moved any application or deposited any fee for verifying the driving licence at Dharamshala, but had shown the driving licence to the Licencing Clerk who had found the same to have been validly issued by the authority. Per contra, the only evidence led by the insurer is the statement of Shri Rathindhra Mohan Goswami (RW-3), Dealing Assistant to DTO (R&L) Kamrup, Distt. Kamrup (Assam). No doubt, he has stated that the licence bearing No. OLA-AS-01 DL/N/43711/1986-87 dated 10.10.1986 had not been issued by 15 the DTO, Kamrup, Gauhati in the name of Shri Gulzar Singh but however in his cross-examination admitted that some pages of the register brought by him are in torn condition and some photographs of the driving licence holders are also not there on the register. In effect he also admitted that no driving licence can be renewed by an authority of another State without there being a no objection certificate of the authority issuing the original licence in another State. He is not aware as to how the licence was renewed by the licencing authority in Himachal Pradesh. Record produced by this witness is in a torn condition and not complete. Even though he has stated that no licence in the name of Shri Gulzar Singh was issued from his office but however, considering the fact that the record produced by him is not complete and is in torn condition not much reliance can be placed on his statement. That apart, it is not the insurer’s case that an Investigator had been appointed to investigate the genuineness of the original driving licence which was found to be fake. Except for his evidence there is no other evidence on record. The claim petition was filed before the Tribunal at Dharamshala. Apparently, there is no justification for not summoning any person from the office of the RLA, Dharamshala, from where it could have been easily and conveniently ascertained as to whether the renewal of the licence by the authority was in accordance with law or not. The insurer summoned witness from the extreme corner of the country who 16 did appear but with torn record. It is not