Case: Lal Chand Vs. Oriental Insurance Co. Ltd

3. This appeal is directed against the final judgment and order dated 6.5.2003 passed by the High Court of Punjab & Haryana at Chandigarh in F.A.O. No.1587 of 2002. The appellant before us is the owner of the vehicle, a truck. The respondent is the insurer of the vehicle. The vehicle met with an accident on 11.10.1998. The claim petition was filed by the claimants before the Tribunal. Accepting their claim, the Tribunal awarded compensation of Rs.2.70 lakhs along with interest. The Tribunal held that the accident took place due to rash and negligent driving of the driver Mam Chand and that the appellant-owner had not committed any breach of the terms and condition of the insurance policy and that the Insurance Company is liable to make the payment of compensation amount to the claimants as insurer of the truck4. The Insurance Company, being aggrieved with the award passed by the Tribunal, filed an appeal before the High Court. The High Court modified the order passed by the Tribunal and directed that the Insurance Company would be entitled to recover the amount from the owner of the offending truck as per the law laid down by this Court in Kamlas case, reported in 2001 (4) SCC 342. The High Court also held that the appellant has contravened the terms and conditions of the insurance policy as the licence was not issued by the Licensing Authority, Hyderabad. The Insurance Company filed application under section 174 of Motors Vehicle Act for recovery of amount of Rs.3,27,890/- paid as compensation to the claimants by the Insurance Company. The appellant herein filed the reply to the application in which he averred that the application for recovery of compensation paid to the claimants by the Insurance Company is not maintainable as the rights of the parties have not been determined by the civil court. The Tribunal held that the Insurance Company is entitled to recover the money from the petitioner through the execution application and ordered to issue a certificate of recovery of amount of Rs.3,27,890/- under section 174 of Motor Vehicles Act and the same be sent to the District Collector5. Aggrieved against the order passed by the High Court, the appellant has preferred the above appeal in this Court. The above appeal was filed with a delay of 339 days. This Court issued notice on the special leave petition as well as on the application for condonation of delay. After notice, the respondent Insurance Company has also filed a counter affidavit and the matter was listed today for final hearing. At this stage no purpose would be served to dismiss the civil appeal on the ground of delay in filing the appeal. Since the notice was ordered on special leave petition and on the delay and the counter affidavit has already been filed, we condone the delay and heard the learned counsel appearing on either side, on merits of the rival claims.

Court's reasoning:
In the instant case, the owner has not only seen and examined the driving licence produced by the driver but also took the test of the driving of the driver and found that the driver was competent to drive the vehicle and thereafter appointed him as driver of the vehicle in question. Thus, 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) and the Insurance Company would not then be absloved of its liability(iii) The breach of policy condition e.g. Disqualification of the driver or invalid driving licence of the driver, as contained in sub- section (1)(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 time11. As observed in the above paragraph, the insurer, namely the Insurance Company, has to prove that the insured, namely the owner of the vehicle, 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 point of time.