Case: United India Insurance Co Ltd Vs. Gian Chand

3. A few facts leading to this appeal may be stated at the outset. A car which was insured by respondent No. 9 - original owner, with the appellant-Insurance Company against third party risk, met with an accident on 1st January, 1988, at about 10.30 a.m. In the said accident, the deceased who was going on a scooter got fatally injured. The contesting respondents are the claimants, being dependants of deceased. They filed a claim for compensation before the Motor Accident Claims Tribunal II, Una in the State of Himachal Pradesh. The contention of the respondents-claimants was that the vehicle was driven by the driver, respondent No. 1 herein, in a rash and negligent manner and because of such driving, the fatal accident occurred to their bread-winner. The defence of the owner of the vehicle, viz., respondent No. 9 was that he had already sold and handed over this vehicle to respondent No. 1 and therefore, he had nothing to do with this claim. Respondent No. 1, on the other hand, submitted before the Tribunal by filing his written statement and also by entering into witness box, that he had nothing to do with the vehicle. He neither purchased it nor had he driven the same. However, he stated that he had no licence to drive the vehicle at the relevant time when the accident occurred. So far as respondent No. 9, who is the insured, was concerned, he did not think it fit to enter the witness box. The defence of the appellant-Insurance Company was that whatever may be the liability of respondent Nos. 1 and 9 regarding the claim for compensation, so far as the appellant-Insurance Company is concerned, it stood exonerated by the exclusion clause in the Insurance Policy which did not permit the insured to hand over the vehicle for purpose of driving to an unlicensed driver. The Tribunal after recording evidence came to the conclusion that the accident was caused due to rash and negligent deriving of the car by respondent No. 1 who was on the wheel at the relevant time. It did not believe the case of respondent No. 9 that he had sold and handed over the vehicle to respondent No. 1 and had nothing to do with the vehicle. This finding was reached especially in view of the fact that respondent No. 9 did not think it fit to come to the witness box to support his case. Consequently the claim for compensation was computed and was made payable by respondent Nos. 1 and 9. However, so far as the Insurance Company was concerned, the Tribunal took the view that the appellant-Insurance Company got exonerated from its liability on account of the fact that respondent No. 9, the insured, had permitted the vehicle to be driven by an unlicensed driver, viz., respondent No. 1 and therefore, he had committed breach of the relevant term of the Policy and that entitled the Insurance Company to get the benefit of the exclusion clause available as a defence to the Company under Section 96(2)(b) of the Motor Vehicles Act, 1939. In the result, the Tribunal while awarding Rs. 58,400/- as compensation, in favour of the respondents-claimants, against respondent No. 1 and the present respondent No. 9, who was respondent No. 2 before the Tribunal, exonerated the appellant- Insurance Company from its liability to meet the claim amount awarded in favour of the claimants.4. That resulted into an appeal before the High Court by respondent No. 1, the driver of the vehicle. In that appeal it was contended by him, amongst others, that the Insurance Company should have been made liable to meet the claim and was wrongly exonerated by the Tribunal. That contention of respondent No. 1 was accepted by the High Court in appeal, though on other contention on merits, the appeal was held to be liable to be dismissed. It was only partly allowed to the extent that the appellant-Insurance Company was held liable jointly and severally to pay along with the insured and the driver the amount of compensation to the claimants. For coming to the said conclusion against the appellant-Insurance Company, the High Court placed strong reliance on a decision of a Bench of two learned Judges of this Court in Skandia Insurance Company Ltd. v. Kokilaben Chandravadan and others, 1987(2) SCC 654.5. The aforesaid decision of the High Court is on the anvil of scrutiny before us in the present appeal.

Court's reasoning:
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.