Case: United India Insurance Co Ltd Vs. Gian Chand

Report it was observed that : "The word `breach in the expression "breach of a specified condition of the policy" in Section 96(2)(b) is of great significance. `Breach means "infringement or violation of a promise or obligation". This induces an inference that the violation or infringement on the part of the promisor must be wilful infringement or violation. Sub-clause (ii) of clause (b) of Section 96(2) enjoins the insurer to establish that the breach was on the part of the insured and that it was the insured who was guilty of violating the promise or infringement of the contract. It is only when the insured himself places the vehicle in charge of a person who does not hold a driving licence, that it can be said that he is `guilty of the breach of the promise that the vehicle will be driven by a licensed driver. The insurer cannot escape from the obligation to indemnify the insured when some mishap occurs by some mischance. When the insured has done everything within his power inasmuch as he has engaged a licensed driver and has placed the vehicle in charge of the licensed driver, with the express or implied mandate to drive himself, it cannot be said that the insured is guilty of any breach. In a way the question is as to whether the promise made by the insured is an absolute promise or whether he is exculpated on the basis of some legal doctrine". We fail to appreciate how the aforesaid decision can be of any avail to learned counsel for the respondents-claimants on the peculiar facts of the present case. It has been clearly held by the Tribunal as well as by the High Court that respondent No. 1 who was permitted to drive the vehicle by respondent No. 9, the insured, was admittedly not having any driving licence. It was not the case of respondent No. 9, the insured, that he did not know that respondent No. 1 whom the vehicle was being handed over was not having a valid licence. In fact, once he did not step in the witness box to prove his case, an adverse inference had necessarily to be drawn against him to the effect that the vehicle had been handed over by him for being driven by an unlicensed driver, respondent No. 1. That finding reached by the Tribunal as well as by the High Court must result in exonerating the Insurance Company of its obligation as the statutory defence became available to it. The High Court, even though agreeing with the finding of fact reached by the Tribunal, has in our view, by misconstruing the ratio of the decision of this Court in Skandia Insurance Company Ltd. v. Kokilaben Chandravadan and others, 1987(2) SCC 654 (supra) erroneously held that the said defence was not available to the Insurance Company on the facts of the present case. Even that apart, a Bench of three learned Judges of this Court in 1996(5) SCC 21 (supra) while upholding the ratio of the decision of this Court in Skandia Insurance Company Ltd. v. Kokilaben Chandravadan and others, 1987(2) SCC 654 (supra) has also taken the same view. 9. Even apart from these Judgments, which do not improve the case of the respondents, strong reliance was placed on two other Judgments of this Court by the learned counsel for the appellant. As noted earlier, they represent the first line of cases. In Kashiram Yadav and another v. Oriental Fire and Insurance Company and others, 1989(4) SCC 128, a bench of two learned Judges of this Court, speaking through Jagannatha Shetty, J. distinguished the decision in Skandia Insurance Company Ltd. v. Kokilaben Chandravadan and others, 1987(2) SCC 654 (supra) and took the view that when the insured had handed over the vehicle to an unlicensed driver, the Insurance Company would get exonerated and the ratio of the decision in Skandia Insurance Company Ltd. v. Kokilaben Chandravadan and others, 1987(2) SCC 654 (supra), would be of no assistance to the claimants in such a case. The fact situation in the present case is almost parallel to the fact situation which was examined by this Court in Kashiram Yadav and another v. Oriental Fire and Insurance Company and others, 1989(4) SCC 128 (supra). There is also a later decision of this Court in New India Assurance Company Ltd. v. Mandar Madhav Tambe and others, 1996(2) SCC 328, wherein a Bench of two learned Judges of this Court to which one of us, B.N. Kirpal, J. was a party, examined a similar fact situation and came to the conclusion that "the exclusion clause in the Insurance Policy makes it clear that the Insurance Company, in the event of an accident, would be liable only if the vehicle was being driven by a person holding a valid driving licence or a permanent driving licence "other than a learners licence". The use of the words "permanent driving licence" in the insurance policy was to emphasise that a temporary or a learners licence-holder would not be covered by the insurance policy". 10. Under the circumstances, when the insured had handed over the vehicle for being driven by an unlicensed driver, the Insurance Company would get exonerated from its liability to meet the claims of third party who might have suffered on account of vehicular accident caused by such unlicensed driver. In view of the aforesaid two sets of decisions of this Court, which deal with different fact situations, it cannot be said that the decisions rendered by this Court in Skandia Insurance Company Ltd. v. Kokilaben Chandravadan and others, 1987(2) SCC 654 (supra) and the decision of the Bench of 3 learned Judges in 1996(5) SCC 21 (supra) in any way conflict with the decisions rendered by this Court in the case of New India Assurance Company Ltd. v. Mandar Madhav Tambe and others, 1996(2) SCC 328 (supra) and Kashiram Yadav and another v. Oriental Fire and Insurance Company and others, 1989(4) SCC 128.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We fail to appreciate how the aforesaid decision can be of any avail to learned counsel for the respondents-claimants on the peculiar facts of the present case. It has been clearly held by the Tribunal as well as by the High Court that respondent No. 1 who was permitted to drive the vehicle by respondent No. 9, the insured, was admittedly not having any driving licence. It was not the case of respondent No. 9, the insured, that he did not know that respondent No. 1 whom the vehicle was being handed over was not having a valid licence. In fact, once he did not step in the witness box to prove his case, an adverse inference had necessarily to be drawn against him to the effect that the vehicle had been handed over by him for being driven by an unlicensed driver, respondent No. 1. That finding reached by the Tribunal as well as by the High Court must result in exonerating the Insurance Company of its obligation as the statutory defence became available to it. The High Court, even though agreeing with the finding of fact reached by the Tribunal, has in our view, by misconstruing the ratio of the decision of this Court in Skandia Insurance Company Ltd. v. Kokilaben Chandravadan and others, 1987(2) SCC 654 (supra) erroneously held that the said defence was not available to the Insurance Company on the facts of the present case.