Insurer appealed against a motor accident award for the death of a nine-year-old boy run over by a tractor driven without a valid licence, challenging the pay-and-recover direction. The High Court affirmed the Tribunal's findings of breach of policy conditions and dismissed the appeal.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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Digitally signed by ANJANI KUMAR ALLENA Date: 2024.11.29 10:40:27 +0530
AFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
MAC No. 1137 of 2016
The HDFC Ergo General Insurance Co. Ltd. Registered And Corporate Office, 1st Floor, 165- 166 Bekbe Rikmaletion, H.T. Paresh Marg, Church Gate, Mumbai (MH) At Present- Devendra Nagar Road, Police Station Devendra Nagar, Civil And Revenue District- Raipur, Chhattisgarh, Insurer Of Tractor No. CG-06-E-7347 .
... Appellant
versus
1 - Dwarika Patel S/o Bodhram Patel, Aged About 30 Years,
2 - Smt. Bhuneshwari Patel, W/o Dwarika Patel, Aged About 30 Years
Both R/o- Village- Raimuda, Post- Achanakpur, Police Station- Patewa Civil And Revenue District- Mahasamund, Chhattisgarh,.......Claimants,
3 - Tularam Thakur, S/o Supetram Thakur, Aged About 35 Years R/o- VillageRaimuda, Post- Achanakpur, Police Station- Patewa Civil And Revenue DistrictMahasamund, Chhattisgarh,....... Driver Of Tractor No. CG-06-E-7347 ,
4- Laxminarayan Patel, S/o Lalkumar Patel, Aged About 32 Years R/o- VillageRaimuda, Post- Achanakpur, Police Station-Patewa Civil And Revenue DistrictMahasamund, Chhattisgarh,........ Owner Of Tractor No. CG-06-E-7347 .
... Respondents
For Appellant : Shri Tanmai Roy and Ms. Pragya Mishra, Advocates. For Respondents 1 & 2 : None, though served. For Respondents 3 & 4 : Ms. Prachi Singh, Advocate.
(HON’BLE SHRI JUSTICE RADHAKISHAN AGRAWAL)
Judgment on Board
28/11/2024
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make the payment first and then recover it from Non-applicants No.1 & 2 – driver and owner. It is not disputed that Non-applicant No.1 is the driver whereas Nionapplicant No.2 is the owner of the offending vehicle. Parties to this appeal are referred hereinafter as per their description before the Claims Tribunal.
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recover the amount of compensation from Non-applicants No.1 & 2, driver & owner, is not sustainable and deserves to be set aside.
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which appears to be breach of policy conditions mentioned in Ex.D.1, which is an insurance policy of the offending vehicle and thus, it is proved from the evidence on record that although the offending vehicle was insured as on 16.05.2014, but it is also proved that on the said date of accident, Non-applicant No.1/driver was not possessing valid and effective driving licence and the said vehicle was being plied in breach of policy conditions. Moreover, Non-applicant No.1 – Tularam, driver of the offending vehicle was also examined himself before the Tribunal where he has stated on oath under Order 18 Rule 4 of C.P.C. that although he was having valid and effective driving licence, but in cross-examination, he admits that he has not filed any driving licence even at the time of recording his deposition.
“110. The summary of our findings to the various issues as raised in these petitions is as follows:
(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
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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 the driver or invalid driving licence of the driver, as contained in sub-section (2)(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 time.
(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 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 t be determined in each case.
(viii) If a vehicle at the time of accident was driven by a person having a learner’s licence, the insurance companies would be liable to satisfy the decree.
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(ix) The Claims Tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third party arising in use of motor vehicle. The said power of the Tribunal is not restricted to decide the claims inter se between claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defence or defences to the insurer, the Tribunal has necessarily the power and jurisdiction to decide disputes inter se between the insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and the award made thereon is enforceable and executable in the same manner as provided in Section 174 of the Act for enforcement and execution of the award in favour of the claimants.
(x) Where on adjudication of the claim under the Act the Tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of Section 149(2) read with subsection (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the Tribunal. Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the Tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by sub-section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the Tribunal.
(xi) The provisions contained in sub-section (4) with the proviso thereunder and sub-section (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover the amount paid under the contract of insurance on behalf of the insure can be taken recourse to by the Tribunal and be extended to claims and defences of the insurer against the insured by relegating them to the remedy before regular court in cases where on given facts and circumstances adjudication of their claims inter se might delay the adjudication of the claims of the victims.”
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by the Supreme Court as follows:
“6. As per the decision in National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, onus is always upon the insurance company to prove that the driver had no valid driving licence and that there was breach of policy conditions. Where the driver did not possess the valid driving licence and there are breach of policy conditions, “pay and recover” can be ordered in case of third-party risks. The Tribunal is required to consider
“as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver ... does not fulfil the requirements of law or not will have to be determined in each case”.
“5. The decision in National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 has no application to cases other than third-party risks and in case of third-party risks the insurer has to indemnify the amount and if so advised, to recover the same from the insured.”
Sd/(Radhakishan Agrawal) JUDGE
Anjani
1 issue framed by the court
Whether the Tribunal erred in directing the insurer to pay and recover compensation where the driver lacked a valid driving licence and the vehicle was plied in breach of policy conditions?
Colour shows how this judgement treated each authority
National Insurance Co. Ltd. v. Swaran SinghRelied on¶11
(2004) 3 SCC 297 · Who else cites this
Shamanna v. Divisional Manager, Oriental Insurance Company LimitedRelied on¶12
(2018) SCC 650 · Who else cites this
1 provisions across 1 enactments
HDFC Ergo General Insurance Co. Ltd.
Dwarika Patel
Bhuneshwari Patel
Tularam Thakur
Laxminarayan Patel
Radhakishan Agrawal
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
