Partly allowed

The New India Insurance Company Limited v. Tulshi Ram Dhruw

Chhattisgarh HC28 Jan 2026MAC/1585/2018

Case brief

AI extract

What is this about?

Insurance appeal against a motor accident compensation award. The court found the driver's licence was fake and the owner failed to prove due diligence, so it set aside the insurer's direct liability but directed pay-and-recover: the insurer pays the award first and recovers from the owner and driver.

What did the court decide?

Insurer's direct liability set aside; insurer to pay awarded amount first with interest, then recover it from owner and driver (non-applicants No.1 and 2); award otherwise affirmed.

The New India Insurance Company Limited Vs Tulshi Ram Dhruw — Insurance | Chhattisgarh HC (2026)

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Digitally signed by YOGESH YOGESH TIWARI TIWARI Date: 2026.01.30 18:56:31 +0530

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2026:CGHC:5073

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NAFR

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HIGH COURT OF CHHATTISGARH AT BILASPUR

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MAC No. 1585 of 2018

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The New India Insurance Company Limited Mumbai Branch Office 25 Chandralok Alganj, Luchnow, 226020 (Uttar Pradesh).

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... Appellant

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versus

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1 - Tulshi Ram Dhruw S/o Durjan Singh Aged About 52 Years R/o Rojgari Para, Kondagaon, District Kondagaon Chhattisgarh.

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2 - Smt. Ruma Dhruw W/o Tulshi Ram Dhruw Aged About 51 Years R/o Rojgari Para, Kondagaon, District Kondagaon Chhattisgarh.

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3 - Kumari Usha D/o Tulshi Ram Dhruw Aged About 31 Years R/o Rojgari Para, Kondagaon, District Kondagaon Chhattisgarh.

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4 - Kumari Harsha D/o Tulshi Ram Dhruw Aged About 23 Years R/o Rojgari Para, Kondagaon, District Kondagaon Chhattisgarh.

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5 - Keshav S/o Tulshi Ram Dhruw Aged About 21 Years R/o Rojgari Para, Kondagaon, District Kondagaon Chhattisgarh.

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6 - Ranjit Kumar S/o Kaliram R/o Jedasal, Tehsil - Jasrana, Thana - Eka, District Firozabad (Uttar Pradesh).

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7 - Tata Motors Limited, Plat No. T 1, T 2, Chinnhat Industrial Area, Lucknow, 226019 (Uttar Pradesh).

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... Respondents

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(Cause-title taken from Case Information System)

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For Appellant : Mr. Sudhir Agrawal, Advocate For Respondent No.7 : Mr. Sangeet Kumar Kushwaha, Advocate

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Hon’ble Shri Amitendra Kishore Prasad, Judge

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Judgment on Board

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29.01.2026

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1. This appeal is by the Insurance Company against the award dated 23.06.2018 passed by learned Motor Accident Claims Tribunal, Kondagaon, District Kondagaon C.G. in Claim Case No.03/2017, awarding total compensation of Rs.6,72,600/- with interest @ 9% per annum from the date of application till realization while fastening liability on the non-applicant Nos. 1 to 3 jointly and severally.

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2. As per the averments made in the claim petition, on 01.02.2016 at about 03:00 p.m., near Bandhapara on NH-30 within the jurisdiction of Police Station Kondagaon, non-applicant No. 1, while driving the New Truck Sold Chasis No.MAT476102GOA00301, Engine No.51L84266963 Temporary Registration No.UP32ATC2575 (for short ‘offending vehicle)’ in a rash and negligent manner, hit the scooter bearing registration No. CG-27-A-2464 from behind, which was being driven by the deceased. As a result, Yashwant Dhruv sustained grievous injuries and was taken to RNT Hospital, Kondagaon, where he succumbed to his injuries during treatment At the time of accident, the offending vehicle was owned by non-applicant No.2, driven by non-applicant No. 1 and insured with non-applicant No.3/Insurance Company.

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3. On claim petition being filed by the claimant under Sections 166, 140 of the Motor Vehicles Act seeking compensation to the tune of Rs.17,05,000/- under various heads, the Tribunal considering the evidence led by both the parties passed an award as mentioned in para 1 of this judgment.

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4. Learned counsel for the appellant submits that the Learned Tribunal has committed a grave error in fastening joint and several liability upon the appellant Insurance Company despite recording a clear and categorical finding regarding the fake driving licence of the driver of the offending vehicle. In para 15 of the impugned award, the Tribunal has held that the offending vehicle was being driven on the basis of a fake driving licence at the time of accident. The Insurance Company had specifically taken defence in para 14 by examining the concerned RTO witness, Narendra Singh (NAW2), who categorically deposed that the driving licence (Exhibit D-2) was not issued from his office. The Insurance Company also examined Lakhpati Borkar (NAW-1), and it stands admitted that non-applicant No. 1 Ranjit Kumar was driving the offending vehicle. Paras 13 to 15 of the impugned award clearly discuss and establish the breach of policy condition; however, despite such findings, the Tribunal has illegally saddled the appellant with liability in para 27 of the award. The said approach is contrary to the settled law laid down by the Hon’ble Supreme Court in Pepsu Road Transport Corporation vs. National Insurance Co. Ltd., (2013) 10 SCC 217, New India Assurance Co. Ltd. vs. Kamla,

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(2001) 4 SCC 342 , and also the judgment in MAC No. 216/2010, decided on 27.10.2017 , wherein it has been consistently held that driving a vehicle with a fake licence constitutes a fundamental breach of policy conditions and the Insurance Company cannot be held liable.

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5. Learned counsel for the appellant further submits that the learned Tribunal has failed to appreciate that the owner and driver of scooter were necessary parties to the claim petition. Admittedly, the deceased himself was driving the said scooter at the time of the accident, and therefore, the aspect of contributory negligence was required to be properly examined. In absence of impleadment of the owner and driver of the scooter, the Tribunal could not have adjudicated upon the issue of negligence in its correct perspective. The non-joinder of necessary parties has caused serious prejudice to the appellant and has vitiated the impugned award, which on this ground also deserves to be set aside or suitably modified by this Court.

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6. On the other hand, learned counsel for the owner submits that the impugned award passed by the learned Tribunal is just, proper, and based on correct appreciation of evidence on record. The Insurance Company has rightly been held jointly and severally liable, and no interference with the impugned award is called for.

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7. I have heard learned counsel for the parties and perused the record.

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8. The principal ground of challenge raised by the appellant is that the learned Tribunal committed a manifest illegality in fastening joint and several liability upon the appellant Insurance Company despite recording a clear and categorical finding that the driver of the offending vehicle, namely non-applicant No. 1 Ranjit Kumar, was driving the vehicle on the basis of a fake and forged driving licence at the time of the accident. It is contended that the appellant Insurance Company specifically raised this defence in its written statement and duly proved the same by examining the concerned RTO witness as well as its official, and by producing the driving licence on record as Exhibit D-2. It is further contended that the owner of the offending vehicle completely failed to establish that he had verified the driving licence of the driver or had exercised due care and caution before employing nonapplicant No. 1 as a driver. Despite such clear breach of policy conditions, the learned Tribunal erroneously fastened liability upon the Insurance Company in para 27 of the impugned award, which is contrary to settled principles of law.

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9. From a perusal of the impugned award, particularly paras 13 to 15, and the evidence available on record, it is evident that the learned Tribunal itself recorded a finding that the driving licence produced on behalf of non-applicant No. 1 was not genuine. The RTO witness, Narendra Singh clearly stated that the said driving licence was not issued from his office, a fact specifically noted by the Tribunal in para 14 of the impugned award. Once such a finding

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regarding a fake and forged driving licence stood conclusively established, the burden squarely shifted upon the owner of the offending vehicle to prove that he had verified the licence and employed the driver after exercising due diligence. No such evidence whatsoever has been adduced by the owner. Consequently, there has been a clear and fundamental breach of the terms and conditions of the insurance policy, and the fastening of liability upon the appellant Insurance Company is wholly unsustainable and liable to be set aside.

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10. In view of the settled legal position laid down by the Hon’ble Supreme Court in a catena of decisions, when the driver is not holding a valid and effective driving licence and the owner fails to prove due diligence, the Insurance Company cannot be made directly liable to satisfy the award. Therefore, the finding of the learned Tribunal fastening liability upon the appellant Insurance Company cannot be sustained in law.

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11. The Supreme Court in National Insurance Co. Ltd. vs. Swaran

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Singh & Others (2004) 3 SCC 297 has categorically held that even if the driver’s licence is found invalid or fake, the insurer must first satisfy the award to protect the rights of the third-party victims, and thereafter recover the same from the insured.

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“104. It is, therefore, evident from the discussions made hereinbefore that the liability of the insurance company to satisfy the decree at the first instance and to recover the awarded amount

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from the owner or driver thereof has been holding the field for a long time.

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110. The summary of our findings to the various issues as raised in these petitions is as follows:

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xxx xxx xxx

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xxx xxx xxx

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(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.

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xxx xxx xxx

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xxx xxx xxx

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(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

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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.”

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12. However, considering that the claimants are third parties and in order to protect their interest, this Court is of the opinion that the principle of “pay and recover” deserves to be applied. The appellant Insurance Company can be directed to satisfy the award in the first instance with liberty to recover the same from the owner and driver of the offending vehicle.

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13. Accordingly, the appeal filed by the appellant Insurance Company is allowed in part. The finding of the learned Tribunal fastening direct liability upon the appellant-Insurance Company is hereby set aside and the same has been shifted to owner and driver of offending vehicle i.e. non-applicants No. 1 and 2. The Insurance Company is directed to pay the awarded amount to the claimants in the first instance, along with interest as awarded by the Tribunal. After making such payment, the appellant-Insurance Company shall be entitled to recover the entire amount so paid from nonapplicants No.1 and 2 (driver and owner of the offending vehicle) by initiating appropriate proceedings in accordance with law.

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Except to the extent indicated above, the award dated 23.06.2018

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passed by the learned Tribunal is affirmed.

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14. The record of the concerned Motor Accident Claims Tribunal be sent back forthwith along with a copy of this judgment for

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information and necessary compliance.

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Sd/-

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