Allowed

Rajeshwar Singh Mankotia v. Usha Rani

Himachal Pradesh HC5 Apr 2023FAO/3/2012

Case brief

AI extract

What is this about?

The High Court allowed an appeal filed by a bus owner against a Motor Accidents Claims Tribunal award. The court quashed the tribunal's order allowing the insurance company to recover paid compensation from the owner, relying on Supreme Court precedents establishing that an owner who verifies a driver's license in good faith is exempt from such liability.

What did the court decide?

The findings of the Tribunal allowing the insurance company to recover compensation from the appellant are quashed and set aside.

Rajeshwar Singh Mankotia Vs Usha Rani — Insurance | Himachal Pradesh HC (2023)

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IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA

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FAO No. 03 of 2012 Reserved on: 16.03.2023 Date of decision: 05.04.2023

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________________________________________________ Rajeshwar Singh Mankotia. …..Appellant. Versus Usha Rani & others. ……Respondents.

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_______________________________________________ Coram_ The Hon'ble Mr. Justice Sushil Kukreja, Judge. 1 Whether approved for reporting?

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________________________________________________ For the appellant: Mr. Rajesh Mandhotra, Advocate.

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Respondent No. 1 ex parte.

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Respondent No. 2: Ms. Tim Saran, Advocate. Respondent No. 3: Mr. Deepak Bhasin, Sr. Advocate, with Mr. Sambhav Bhasin, Advocate.

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Sushil Kukreja, Judge.

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The present appeal is maintained by the appellant, owner of vehicle (one of the respondents before the learned Tribunal below), against the award passed by learned Motor Accidents Claims Tribunal, Shimla (hereinafter referred to as “the learned Tribunal below”), in MACP No. 14K/II-2009, decided on 25.06.2011.

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1 Whether reporters of Local Papers may be allowed to see the judgment?

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2. Succinctly, the facts giving rise to the present

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appeal are that claimant Smt. Usha Rani (respondent No. 1 herein), maintained a petition under Section 166 of the Motor Vehicles Act, 1988 (hereinafter, for the sake of brevity, referred to as “the Act”). As per the claimant, on 18.12.2004, around 07:35 p.m., her son was traveling on scooter No. HP40A-0843, as pillion rider, to Himachal Metal Industry Kangra. Near the Petrol Pump, Kangra, bus No. HP-39A3961, which was being driven by respondent No. 2 Surinder Kumar in a rash and negligent manner, hit the scooter and resultantly son of the claimant sustained injuries and died. The claimant further contended that FIR No. 434 of 2004 was registered under the apt sections. The age of the deceased was 24 years, he used to work as utensil maker used his monthly income, as per the claimant, was Rs.8000/-. The claimant, who is mother of the deceased, was dependent on the deceased, thus compensation of Rs.7,00,000/- (rupees seven lacs) was sought.

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Shri Surinder Kumar, driver of the vehicle (respondent No. 2 herein), by filing reply to the claim petition, refuted the claim of the claimant on the ground of

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maintainability. Respondent No. 1 further contended that the accident occurred due to the rash and negligent driving of the driver of scooter, as the scooter driver hit the stationary bus, however, FIR was registered against him. Likewise, Shri Rajeshwar Singh, owner of the bus (appellant herein) contended that the accident occurred due to the rash and negligent driving of the driver of the scooter. He contended that the driver of the scooter could not control the scooter and bashed it against the bus.

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On the other hand, Insurance Company (respondent No. 3 herein), by filing reply to the claim petition contended that at the time of the accident the driver of the bus was not having valid and effective driving license and he was driving he vehicle in violation of the terms and conditions of the insurance policy. Respondent No. 3 further contended that the accident occurred due to the rash and negligent driving of the scooter driver. The income of the deceased was not Rs.8000/- per month, as he was casual worker and used to earn Rs.2000/- per month. Lastly dismissal of the claim petition was sought.

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The learned Tribunal below has framed the

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following issues for determination and adjudication:

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“1. Whether the deceased died due to rash & negligent driving of vehicle No. HP-39A-3961 as alleged? OPP

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2. If issue No. 1 is proved in affirmative to what amount of compensation the petitioner/applicant is entitled to and from whom? OPP

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3. Whether no cause of action accrued to the petitioner? OPR 1 to 3

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4. Whether the petition is not maintainable as alleged? OPR 1 to 3

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5. Whether the driver did not hold valid & effective driving licence at the time of accident? OPR-3

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6. Whether the driver of scooter was responsible for the accident and case was of composite negligence as alleged? OPR-3

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7. Relief.”

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After deciding issue No. 1 in favour of the claimant, issue No.

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2 partly in favour the claimant, issues No. 3 and 4 against the respondents, issue No. 5 in favour of the Insurance Company (respondent No. 3) and issue No. 6 against respondent No. 3, claimant was held entitled to compensation of Rs.3,18,000/- (rupees three lac eighteen

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thousand only) against the respondents, alongwith 9% per annum interest, from the date of filing of the petition till realization of the amount. The learned Tribunal below further held that initially the award amount will be deposited by the Insurance Company (respondent No. 3) and the Insurance Company was held to be legally entitled to recover the amount of compensation, so deposited by it, from the owner of the vehicle, in accordance with law.

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Feeling aggrieved, the appellant, owner of the bus (respondent No. 2 before the learned Tribunal below), preferred the instant appeal under Section 173 of the Act against the award by the learned Tribunal below.

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I have heard the learned counsel for the appellant, learned counsel for respondent No. 2, learned Senior Counsel for respondent No. 3 and carefully examined the entire record.

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The learned counsel for the appellant contended that the findings recorded by the learned Tribunal below regarding the fact that the Insurance Company is entitled to recover the amount from the appellant (owner of the vehicle) deserves to be set-aside, as the appellant has duly proved

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on record that he had taken due precaution with regard to the driving license of the driver, as when he had hired Surinder Kumar, respondent No. 2 (Driver of the offending vehicle), he has seen his driving license and also took his test, as such the impugned award is liable to be set-aside to the extent that the Insurance Company (respondent No. 3) is entitled to recover the amount from the appellant.

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On the other hand, the learned Senior Counsel for the Insurance Company supported the impugned award of the learned Tribunal below and has contended that since the driver of the vehicle was not holding valid and effective driving license at the time of the accident, therefore, the learned Tribunal below has rightly held that the Insurance Company is entitled to recover the award amount in accordance with law.

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The perusal of the impugned award reveals that the petition filed by the claimant Usha Rani was allowed and compensation to the tune of Rs.3,18,000/- (rupees three lacs eighteen thousand) was awarded in her favour and against the respondents, alongwith interest @ 9% per annum, from the date of the institution of the petition till the

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deposit of the amount. However, since it was held that the driver of the offending vehicle was not holding valid and effective driving license and the vehicle was being driven at the time of the accident in violation of the terms and conditions of the insurance policy, it was ordered that initially the award amount shall be deposited by the Insurance Company and thereafter the Insurance Company will be entitled to recover the award amount from the owner, in accordance with law.

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At the very outset, it may be pertinent to note here that the Hon’ble Supreme Court in cases like (1) United India Insurance Company Ltd. vs. Lehru & others, (2003) 3 Supreme Court Cases 338, (2) National Insurance Company Ltd. vs. Swaran Singh & others, (2004) 3 Supreme Court Cases 297 and (3) Nirmala Kothari vs. United India Insurance Company Limited, (2020) 4 Supreme Court Cases 49, has repeatedly held that if the driver produces the driving license, which on the face of it looks genuine, owner is not expected to find out whether the driving license is, in fact, issued by the competent authority or not. The owner is only expected to verify if the driver has a

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driving license and if he finds the driver to be competent to drive the vehicle and has satisfied himself that the driver has

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a driving license, there would be no breach of insurance policy and the insurance company would be liable under the

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policy.

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In United India Insurance Company Ltd. vs. Lehru & others, (2003) 3 Supreme Court Cases 338, it has been held by the Hon’ble Apex Court as under:

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“20. When an owner is hiring a driver he will therefore have to check whether the driver has a driving licence. If the driver produces a driving licence which on the face of it looks genuine, the owner is not expected to find out whether the licence has in fact been issued by a competent authority or not. The owner would then take the test of the driver. If he finds that the driver is competent to drive thevehicle, he will hire the driver. We find it rather strange that insurance companies expect owners to make inquiries with RTOs, which are spread all over the country, whether the driving licence shown to them is valid or not. Thus where 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). The insurance company would not then be absolved of liability. If it ultimately turns out that the licence was fake, the insurance company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive. More importantly, even in such a case the insurance company would remain liable to the innocent third party, but it may be able to recover from the insured. This is the law which has been laid down in Skandia, Sohan Lal Passi and Kamla cases. We are in full agreement with the views expressed therein and see no reason to take a different view.”

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13. In National Insurance Company Ltd. vs.

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Swaran Singh & others, (2004) 3 Supreme Court Cases

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297, after taking note of the aforesaid judgment, it has been

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held by the Hon’ble Apex Court as under:

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

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(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 be so interpreted as to effectuate the said object.

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(ii) Insurer is entitled to raise a defence in a claim petition filed under Section 163 A or Section 166 the Motor Vehicles Act, 1988 inter alia in terms of Section 149(2)(a)(ii) of the said Act.

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(iii) The breach of policy condition e.g., disqualification of driver or invalid driving licence of the driver, as contained in subsection (2)(a)(ii) of Section 149, have 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 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 duly licensed driver or one who was not disqualified to drive at the relevant time.

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(iv) The insurance companies are, 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.

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(v) The court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance of each case.

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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 be allowed to avoid its liability towards 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 insured under Section 149(2) of the Act.

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(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 to be determined in each case.

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(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 with Section 168 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

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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 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 the Act for enforcement and execution of the award in favour of the claimants.

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(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 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 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.

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(xi) The provisions contained in sub-section (4) with proviso thereunder and subsection (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover amount paid under the contract of insurance on behalf of the insured can be taken

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recourse of by the Tribunal and be extended to claims and defences of insurer against 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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14. In Nirmala Kothari vs. United India Insurance

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Company Limited, (2020) 4 Supreme Court Cases 49, the

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Hon’ble Apex Court has held as under:

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“12. While hiring a driver the employer is expected to verify if the driver has a driving licence. If the driver produces a licence which on the face of it looks genuine, the employer is not expected to further investigate into the authenticity of the licence unless there is cause to believe otherwise. If the employer finds the driver to be competent to drive the vehicle and has satisfied himself that the driver has a driving licence there would be no breach of Section 149(2)(a)(ii) and the insurance company would be liable under the policy. It would be unreasonable to place such a high onus on the insured to make enquiries with RTOs all over the country to ascertain the veracity of the driving licence. However, if the insurance company is able to prove that the owner/insured was aware or had notice that the licence was fake or invalid and still permitted the person to drive, the insurance company would no longer continue to be liable.”

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15. Therefore, in the instant case, the evidence has

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to be appreciated keeping in mind the aforesaid observations

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of the Hon’ble Supreme Court.

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The driver of the offending vehicle appeared in the witness-box as RW-1 and he had produced his driving license, Ex. RW-1/A. In cross-examination, he admitted that at the time of his deployment, the owner of the vehicle took his driving test and also perused his driving license. He also stated that his driving license was issued in the year 1985 from Motor Licensing Office (MLO), Dharamshala. He further stated in his cross-examination that his driving license

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was renewed from the office of Licensing Authority, Palampur.

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RW-2, License Clerk from the office of S.D.M. Dharmashala, brought the summoned record and as per the record the driving license of driver Surinder Kumar was renewed upto 12.07.2000 and renewal fee was deposited on 24.07.1997. He admitted in his cross-examination that the license was not originally issued from the office of Licensing Authority, Dharamshala, but the duplicate license was issued from their office.

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Owner of the vehicle appeared in the witness-box

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as RW-3 and he has specifically deposed that before deploying Surinder, as driver, he had duly checked his

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driving license. No evidence has been led by the insurance company to prove that the owner was aware or had noticed that the driving license possessed by the driver, that is respondent No. 1, was fake and invalid and he still permitted him to drive.

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The perusal of the entire evidence on record reveals that the driving license, Ex. RW-1/A, on the face of it looks genuine, which was renewed from the office of S.D.M. Dharamshala. Before deploying the driver, the owner had duly checked his license, therefore, in view of the law laid down by the Hon’ble Apex Court, as discussed hereinabove, the Insurance Company (respondent No. 3 herein) cannot be held entitled to recover the compensation amount from the appellant, as the appellant has taken due precaution, which the owner of the vehicle had to take, as such the learned Tribunal below has committed error in holding that the Insurance Company is entitled to recover the award amount from the owner in accordance with law.

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In view of what has been discussed hereinabove, the instant appeal is allowed and the findings of the learned Tribunal below to the extent that the insurance company was

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held entitled to recover the amount of compensation, as assessed and awarded by the learned Tribunal below, from the owner of the vehicle (appellant herein), are quashed and

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set-aside.

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Pending application(s), if any, shall also stand(s)

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disposed of.

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( Sushil Kukreja ) Judge

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5^th April, 2023

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(virender)

Rajeshwar Singh Mankotia v. Usha Rani

Case brief

What is this about?

What did the court decide?

Rajeshwar Singh Mankotia v. Usha Rani

Case brief

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What did the court decide?

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