IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH FAO No.169 of 2000 Date of decision:27.08.2010 New India Assurance Company Limited ....Appellant versus Surjit Kaur and others ...Respondents CORAM: HON’BLE MR. JUSTICE K. KANNAN ---- Present: Mr. Ravinder Arora, Advocate, for the appellant. Mr. Arun Bansal, Advocate, and Mr. Sandeep Bansal, Advocate, for respondent No.6. ---- 1. Whether reporters of local papers may be allowed to see the judgment ? 2. To be referred to the reporters or not ? 3. Whether the judgment should be reported in the digest ? ---- K.Kannan, J. (Oral) 1. The Insurance Company is in appeal challenging the liability on the ground that the driver-Buta Singh did not have a valid driving licence and, therefore, the Insurance Company could not have been made liable to indemnify the insured. 2. At the trial, Jeevan Kumar, a Licence Clerk of the office of Registering Authority, Una, had been examined as RW3, who stated that no driving licence bearing No.46876/85/Una had been issued in the name of Buta Singh. Another witness Krishan Kumar had been examined FAO No.169 of 2000 - 2 - as RW2 from DTO, Mansa to state that against entry No.3520, the licence had been issued in the name of Gurjant Singh son of Muker Singh and the same book carried yet another entry in the name of Buta Singh son of Tara Singh. The existence of two entries in the renewal register had been taken by the Tribunal as not establishing the contention of the Insurance Company that the licence was fake. The Tribunal also reasoned that the owner must have exercised due caution while looking at the renewal licence and must have been led to believe that the licence was genuine. 3. The reasoning of the Tribunal is, in my view, erroneous, if a witness had been brought to the effect that the original issue of licence by the authority in Una was fake, even if the renewal had been taken to be true, it cannot be treated as a valid licence in the eye of law, as laid down by the Hon'ble Supreme Court in United India Insurance Versus Divinder Singh (2007) 8 SCC 342. In National Insurance Company Versus Swaran Singh (2004) 3 SCC 297, the Hon'ble Supreme Court was dealing specifically with a situation of how a licence which is proved to be fake but the owner did not know about the same, while summarizing the point of law made in paragraph 110 in Swaran Singh's case in sub-paras iv to vii the Hon'ble Supreme Court said, (iv) 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 FAO No.169 of 2000 - 3 - 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 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 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. (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.” 4. These observations of the Hon'ble Supreme Court would show that the owner must be shown to have taken reasonable care to find out whether the driving licence produced by the driver does not fulfil the requirements of law or not. The Hon'ble Supreme Court also said that this issue will be determined in each case. An inference that the owner must have verified and must be believed to be true must be a matter of direct evidence given by the owner and cannot be a matter of inference by the Tribunal with no evidence placed at all by the owner. In this case, the owner has not examined himself to speak about any bona fides of his belief with reference to the alleged genuineness of the otherwise fake licence. FAO No.169 of 2000 - 4 - 5. The liability cast on the insurer will subsist only to satisfy the claim of the claimants and the insurer will have a right of recovery against the insured/owner. 6. The award of the Tribunal will stand modified and the appeal is allowed to the above extent. (K.KANNAN) JUDGE 27.08.2010 sanjeev