Afr High Court
Case Details
1 YOGESH TIWARI Digitally signed by YOGESH TIWARI Date: 2025.09.03 18:27:13 +0530 2025:CGHC:44966 AFR HIGH COURT OF CHHATTISGARH AT BILASPUR Judgment Reserved on : 24.07.2025 Judgment Delivered on : 03.09.2025 MAC No. 1957 of 2018 Branch Manager National Insurance Company Limited Kounsi Line Rajnadgaon Tehsil And District- Rajnangaon Throuth Authorized Signatory For National Insurance Company Limited Divisional Officer Vyapar Vihar Road, Bilaspur, Chhattisgarh. --- Appellant Versus 1 - Mukesh Kumar Bhandari S/o Ramadhar Bhandari Aged About 30 Years Caste Halba, R/o Village Chikhalakasa Ward No. 4 P.S. Dallirajhara, Tehsil And District- Balod, Chhattisgarh. 2 - Shiv Kumar Nishad S/o Chaitram Nishad Aged About 26 Years R/o Village Bhatagaon P.S. And Tehsil Gundardehi, District- Balod, Chhattisgarh. 3 - Kanti Lal Chopda S/o C.L. Chopda Aged About 55 Years R/o Chopda Compound Ganjpara Durg Tehsil And District- Durg, Chhattisgarh. --- Respondents MAC No. 1520 of 2018 Kantilal Chopda S/o Champalal Chopda Aged About 55 Years R/o Chopda Compound, Ganjpara Durg, Tahsil And District Durg, Chhattisgarh. 2 Versus ---Appellant 1 - Mannu Lal Nayak S/o Patru Ram Nayak Aged About 40 Years R/o Village Mongri Po. Latabore, Police Station And Tehsil Gundardehi, District Balod, Chhattisgarh. 2 - Branch Manager National Insurance Company Ltd, Address Kounsi Line, Rajnandgaon, Tahsil And District Rajnandgaon, Chhattisgarh. 3 - Shiv Kumar Nishad S/o Chaitram Nishad Aged About 26 Years R/o Village Bhathagaon, Police Station And Tehsil Gundardehi, District Balod, Chhattisgarh. --- Respondents MAC No. 1518 of 2018 Kantilal Chopda S/o Champalal Chopda Aged About 55 Years R/o. Chopda Compound, Ganjpara Durg, Tahsil And District Durg Chhattisgarh. ---Appellant Versus 1 - Mukesh Kumar Bhandari S/o Ramadhar Bhandari, Aged About 30 Years Cast Halba, R/o. Village Chikhalakasa Ward No. 4, Thana Dallirajhara, Tehsil And District Balod Chhattisgarh. 2 - Branch Manager, National Insurance Company Ltd. Address Kounsi Line, Rajnandgaon, Tahsil And District Rajnandgaon Chhattisgarh. 3 - Shiv Kumar Nishad S/o Chaitram Nishad, Aged About 26 Years R/o Village Bhathagaon, Police Station And Tahsil Gundardehi, District Balod Chhattisgarh. --- Respondents MAC No. 1901 of 2018 Branch Manager National Insurance Company Limited Kounsi Line Rajnandgaon Tahsil And District - Rajnandgaon, Through - Authorized Signatory For National Insurance Company Limited Divisional Office Vyapar Vihar Road Bilaspur Chhattisgarh. ---Appellant 3 Versus 1 - Mannu Lal Nayak S/o Patru Ram Nayak Aged About 40 Years R/o Village Mongari Post Office Latabor, Police Station And Tahsil Gundardehi, District - Balod, Chhattisgarh. 2 - Shiv Kumar Nishad S/o Chaitram Nishad Aged About 26 Years R/o Village Bhatagaon, Police Station And Tahsil Gundardehi, District - Balod, Chhattisgarh. 3 - Khanti Lal Chopda S/o C. L. Chopda Aged About 55 Years R/o Chopda Compound Ganjpar Durg, Tahsil And District - Durg, Chhattisgarh. (Cause-title taken from Case Information System) ... Respondents
Legal Reasoning
“14. This Court in National Insurance Co. Ltd. v. Swaran Singh and Others [(2004) 3 SCC 29] clearly laid down that the liability of the Insurance Company vis-a- vis the owner would depend upon several factors. The owner would be liable for 15 payment of compensation in a case where the driver was not having a licence at all. It was the obligation on the part of the owner to take adequate care to see that the driver had an appropriate licence to drive the vehicle.” It was opined : “16. In a case of this nature, therefore, the owner of a vehicle cannot contend that he has no liability to verify the fact as to whether the driver of the vehicle possessed a valid licence or not.” 19. The principle laid down in Kusum Rai (supra) has been reiterated in Ishwar Chandra & Ors. v. Oriental Insurance Co. Ltd. & Ors. [(2007) 10 SCC 650], referring to sub-section (1) of Section 15 of the Act, this Court stated the law, thus : “9. From a bare perusal of the said provision, it would appear that the licence is renewed in terms of the said Act and the rules framed thereunder. The proviso appended to Section 15 (1) of the Act in no uncertain terms states that whereas the original licence granted despite expiry remains valid for a period of 30 days from the date of expiry, if any application for renewal thereof is filed thereafter, the same would be renewed from the date of its renewal. The accident took place on 28-4-1995. As on the said date, the 16 renewal application had not been filed, the driver did not have a valid licence on the date when the vehicle met with the accident.” 21. In view of the aforesaid specific provisions of the Motor Vehicles Act and the authoritative pronouncements of the Hon’ble Supreme Court, as also considering the facts and circumstances of the case at hand, wherein the driving licence of the driver of the offending vehicle was not renewed from 09.09.2013 to 05.03.2017 and the accident occurred on 19.04.2016, we find no error in the finding recorded by the learned Claims Tribunal that on the date of accident, driver of the offending vehicle was not possessing a valid and effective licence to drive a 'Transport Vehicle' leading to breach of conditions of insurance policy and exonerating the Insurance Company from its liability. 22. As this Court is of the considered opinion that there has been a fundamental breach of the terms and conditions of the insurance policy inasmuch as the driver of the offending vehicle was not holding a valid and effective licence to drive a Transport Vehicle on the date of accident. The liability, therefore, cannot be fastened upon the insurer. Accordingly, it is held that the owner of the offending vehicle is liable to satisfy the award of compensation as determined by the learned Claims Tribunal and the Insurance Company is exonerated from its liability to 17 indemnify the insured and the responsibility to satisfy the award shall rest solely upon the owner of the offending vehicle. 23. In the result, the appeals filed by the owner of the offending vehicle being MAC Nos.1518/2018 and 1520/2018 are dismissed and the appeals filed by the Insurance Company being MAC Nos.1957/2018 and 1901/2018 succeed and are allowed. The Insurance Company stands exonerated from its liability to satisfy the award, in view of the breach of policy conditions, and the liability to pay compensation shall rest entirely upon the owner of the offending vehicle. 24. It is an admitted position that, pursuant to the interim orders passed by the Co-ordinate Bench of this Court on 05.12.2018 and 13.12.2018, the Insurance Company was directed to deposit 75% of the awarded amount before the learned Claims Tribunal within a stipulated period of two weeks. It is further borne out from the record that the said amount, if deposited, has already been released in favour of the respective claimants and partly realised by the owner of the offending vehicle through execution proceedings. In such view of the matter, it is directed that the said sum, already disbursed to the claimants, shall not be recoverable from them at this stage. The balance amount of compensation, as finally determined by this Court, shall be paid by the owner of the offending vehicle to the claimants within a period of 60 days from 18 the date of production of a certified copy of this judgment before the learned Claims Tribunal. 25. The Insurance Company is granted liberty to recover the amount of compensation, which it has already satisfied to the claimants, from the owner of the offending vehicle by initiating appropriate execution proceedings before the competent Court. 26. The record of the concerned Motor Accident Claims Tribunal be remitted forthwith along with a certified copy of this judgment for necessary information and compliance. Yogesh Sd/- Sd/- (Amitendra Kishore Prasad) Judge
Arguments
For Insurance Company : Mr. B.N. Nande, Advocate For Owner : Mr. Priyank Rathi, Advocate Hon’ble Shri Amitendra Kishore Prasad, Judge C A V Judgment 1. Since all these appeals arise out of the same accident, they have been clubbed together, heard together and decided by this common judgment. 2. Challenge in these appeals is to the awards dated 19.06.2018 and 26.06.2018, respectively passed by the learned Motor Accident Claims Tribunal, Balod, District Balod (C.G.) (hereinafter referred to as 'Claims Tribunal') in Claim Case Nos.78/2016 and 79/2016, respectively whereby learned Claims Tribunal allowed claim application in part of the injured claimants. 3. MAC Nos.1957/2018 and 1901/2018 have been preferred by the 4 Insurance Company assailing the finding of the learned Claims Tribunal, whereby despite holding that there was a breach of policy conditions on the part of the owner and driver of the offending vehicle and fastening liability upon them, the Tribunal has directed the Insurance Company to satisfy the award in the first instance with liberty to recover the same from the owner of the offending vehicle 4. MAC Nos.1518/2018 and 1520/2018 have been preferred by the owner of the offending vehicle questioning the impugned awards on the ground that the learned Claims Tribunal has erroneously held the owner liable for payment of compensation on the premise that there was breach of the terms and conditions of the insurance policy. 5. Brief facts of the cases, in a nutshell, are that, on 19.04.2016 at about 1.00 PM, Mukesh Kumar Bhandari along with Mannu Lal Naik was travelling on a motorcycle bearing registration No.CG- 07-3436 from village Chikhlakasa to Dalli Rajhara for purchasing wedding materials. When they reached near Atal Chowk, a truck bearing registration No.CG-07-CA-6418 (for short, ‘offending vehicle’), coming from Dalli Rajhara side, was driven rashly and negligently and dashed the motorcycle, as a result of which, both the claimants (driver as well as pillion rider) fell down and sustained grievous injuries over their persons. 5 6. The claimants have filed separate claim applications being Claim Case Nos.78/2016 and 79/2016, respectively claiming compensation to the tune of Rs.20,28,000/- and Rs.27,88,000/-, respectively under various heads. 7. Non-applicant No. 2, i.e. owner of the offending vehicle filed his written statement and denied the allegations, disputed the income of the claimants and contended that the accident occurred due to the rash and negligent driving of the claimant. It was further pleaded that if liability arose, the same rested with the insurer. 8. Non-applicant No. 3 (insurance company) by filing the separate written statement also denied the claim, alleging contributory negligence on the part of the claimant, exaggeration of injuries, and breach of policy conditions. It was contended that the claimants themselves were responsible for the accident, and therefore, the claim applications were liable to be dismissed. 9. On appreciation of the pleadings as well as the oral and documentary evidence brought on record by the respective parties, the Claims Tribunal awarded a sum of Rs. 1,58,804/- in Claim Case No. 78/2016 and a sum of Rs. 12,39,348/- in Claim Case No. 79/2016, fastening the liability to satisfy the award upon the owner of the offending vehicle. The Tribunal further directed that the Insurance Company shall first satisfy the amount of compensation and thereafter recover the same from the owner of 6 the offending vehicle, as there was a breach of the terms and conditions of the insurance policy. 10. Mr. B.N. Nande, learned counsel for the Insurance Company submits that the impugned award passed by the learned Claims Tribunal is contrary to law and wholly unsustainable against the insurer. It is urged that the Claims Tribunal has failed to properly appreciate the pleadings and the evidence brought on record. It is contended that the claimants did not examine any doctor who had allegedly treated them, nor was any medical witness produced to prove the surgery said to have been undertaken. In the absence of such medical evidence, the exact nature of the injuries, the treatment undergone, and the degree of disability, if any, could not be established. Despite the said serious lacuna, the Claims Tribunal proceeded to assess compensation, which is unsustainable in the eyes of law. It is further submitted that the Claims Tribunal itself recorded a finding that there was a breach of the terms and conditions of the policy, as the driver of the offending vehicle did not possess a valid and effective licence at the relevant time. However, having held that there was a breach, the Claims Tribunal erred in directing the Insurance Company to first satisfy the award and thereafter recover the amount from the insured, hence, such a direction is erroneous in law. The owner of a ‘Heavy 'Transport Vehicle'’ was under a statutory as well as contractual obligation to ensure that the driver employed held a valid and effective driving licence. An owner who fails to discharge 7 such obligation commits a fundamental breach of policy conditions, and in such circumstances, the insurer cannot be saddled with liability even in respect of third-party claims. 11. On the other hand, Mr. Priyank Rathi, learned counsel appearing for the owner of the offending vehicle submits that the offending vehicle was duly insured with the Insurance Company on the date of the incident. The insurance certificate has been brought on record and marked as Exhibit D-3C before the learned Claims Tribunal. It is, therefore, submitted that the liability, if any, to satisfy the award rests with the insurer. It is further urged that the driver of the offending vehicle was duly authorised and competent to drive, having a valid and effective driving licence at the relevant time. The driving licence has been exhibited as Exhibit D-2C and Exhibit D-1C before the Claims Tribunal, which was issued on 08.04.2006 and was effective up to 06.04.2026. Thus, on the date of the accident, the driver held a valid and subsisting driving licence. It is also contended that the offending vehicle was not being plied for any unlawful purpose at the time of the accident. Since the driver was duly licenced, there was no breach, much less a fundamental breach, of the policy conditions. The owner of the offending vehicle had also taken adequate precaution before employing the driver. He was subjected to a skill test, in which he successfully drove the vehicle, and only thereafter, upon being satisfied of his competence and after perusing the driving licence produced by him, the owner engaged him in service. This fact has 8 not been disputed or controverted by the Insurance Company, and therefore, it must be deemed to be admitted that the owner exercised due diligence before employing the driver. Learned counsel further submits that the owner is not required to conduct a roving inquiry into the genuineness of the driving licence, once he has satisfied himself by way of a skill test and by relying on the licence produced by the driver. Employment of a driver in such bonafide manner cannot be construed as negligence or breach of policy condition. It is lastly urged that though the Insurance Company has attempted to raise a defence alleging that the driver did not hold a valid licence, the said plea has not been proved. The Insurance Company has neither adduced any cogent evidence to establish invalidity of the licence nor examined the appellant on this point. Therefore, no dispute survives as to the validity of the licence. Even otherwise, assuming though not admitting, that the licence were found invalid, still the owner cannot be held liable unless it is proved by the Insurance Company that such invalidity was within the knowledge of the owner at the time of employing the driver. On these premises, it is submitted that there being no breach of policy conditions on the part of the owner of the offending vehicle, the entire liability, if any, to satisfy the award rests solely with the Insurance Company. 12. Reliance has been placed by the learned counsel for the owner of the offending vehicle upon the judgments rendered by Hon’ble Supreme Court in the matters of United India Insurance 9 Company Limited v. Lehru and others, (2003) 3 SCC 338, Nirmala Kothari v. United India Insurance Company Limited, (2020) 4 SCC 49, Skandia Insurance Company Limited v. Kokilaben Chandravadan, (1987) 2 SCC 645, Ram Chandra Singh v. Rajaram, (2018) 8 SCC 799 and National Insurance Company Limited v. Swaran Singh, (2004) 3 SCC 297 to contend that the liability fastened upon the owner deserves to be set aside. The offending vehicle was duly insured with the Insurance Company on the date of the accident, and the insurer has failed to establish either a fundamental breach of the policy conditions or that the alleged invalidity of the licence, if any, was within the knowledge of the owner at the time of employing the driver. In these circumstances, the entire liability to satisfy the award amount as determined by the learned Claims Tribunal ought to be borne solely by the Insurance Company. The owner of the offending vehicle, therefore, prays that the liability imposed upon him be vacated and the Insurance Company alone be held liable to discharge the awarded sum to the respective claimants. 13. I have heard learned counsel for the parties, considered their rival contentions and perused the record of the claim cases carefully with utmost circumspection. 14. The learned Claims Tribunal, while deciding Issue No. 2, has categorically examined the question of breach of the terms and conditions of the insurance policy. On a close scrutiny of the oral 10 and documentary evidence brought on record, it came to the conclusion that on the date of the accident, the driver of the offending vehicle was not holding a valid and effective licence to drive a 'Transport Vehicle'. The licence relied upon by the owner was found to have been renewed only subsequent to the date of accident, and therefore, on 19.04.2016, the driver was not duly authorised to drive the 'Transport Vehicle' in question. The Tribunal, therefore, held that the owner had failed to exercise due diligence in verifying the licence of the driver and had permitted him to drive the vehicle without holding a valid and effective authorisation, thereby committing a breach of the terms and conditions of the insurance policy within the meaning of Section 149(2) of the M.V. Act. 15. At the same time, having regard to the fact that the claim was by a third party, the Claims Tribunal applied the principles laid down by the Hon’ble Supreme Court in the matter of National Insurance Company Limited v. Swaran Singh and another, (2004) 3 SCC 297 and New India Assurance Company Limited v. Manjeet Kaur and others, (2004) 1 SCC 551, wherein it has been held that even in cases of breach of policy conditions, the insurer cannot be absolved of its statutory liability towards third parties. The Claims Tribunal, therefore, directed that the Insurance Company shall first satisfy the award in favour of the claimants and thereafter recover the same from the owner of the offending vehicle by taking recourse to law. Thus, Issue No. 2 was decided 11 against the owner and in favour of the insurer, but with the ultimate liability to initially satisfy the award fastened upon the Insurance Company with the right of recovery against the insured. 16. Insofar as the submission of learned counsel for the owner of the offending vehicle that the learned Claims Tribunal erred in holding violation of the conditions of the insurance policy on the ground of non-renewal of driving licence is concerned, the Claims Tribunal, after analysing Exhibits D-1C, D-2C and the statements of the witness, namely Paleshwar Sahu (NAW-2), has categorically recorded that the licence of the driver was not valid to drive a 'Transport Vehicle' on the date of the accident i.e. 19.04.2016, as the earlier authorisation had expired on 09.09.2013 and was renewed only from 06.03.2017 to 05.03.2020. Thus, on the date of accident, the driver did not possess a valid and effective licence to drive a 'Transport Vehicle', and even no application for renewal had been made within the statutory period. 17. Section 15 of M.V. Act prescribes for 'Renewal of driving licences', relevant portion of which is reproduced herein below:- “15. Renewal of driving licences. —(1) Any licensing authority may, on application made to it, renew a driving licence issued under the provisions of this Act with effect from the date of its expiry: Provided that in any case where the application for the renewal of a licence is 12 made more than thirty days after the date of its expiry, the driving licence shall be renewed with effect from the date of its renewal: Provided further that where the application is for the renewal of a licence to drive a 'Transport Vehicle' or where in any other case the applicant has attained the age of forty years, the same shall be accompanied by a medical certificate in the same form and in the same manner as is referred to in sub- section (3) of section 8, and the provisions of sub-section (4) of section 8 shall, so far as may be, apply in relation to every such case as they apply in relation to a learner's licence.” 18. The proviso appended to sub-section (1) of Section 15 of M.V. Act very specifically prescribes that if application for renewal of a licence is made after lapse of period of thirty days from its expiry, then the driving licence shall be renewed with effect from the date of its renewal only, meaning thereby that the application for renewal of license is being made more than thirty days after expiry of validity period of license, then its renewal will not from the last date of validity period, but the date of its renewal only. 19. In the instant case, non-applicant’s witness Paleshwar Sahu (NAW-2) has specifically stated in his evidence that the driving licence of respondent No.1 was not renewed from 09.09.2013 to 05.03.2017, and the said licence was renewed only from 06.03.2017 to 05.03.2020. As such, it is apparent that for the 13 period from 09.09.2013 to 05.03.2017, there was no valid driving licence to drive a 'Transport Vehicle', and consequently, on the date of accident i.e. 19.04.2016, respondent No.1 was not holding an effective and valid licence. 20. The issue of renewal of license has been considered by Hon'ble Supreme Court in the matter of Ram Babu Tiwrai v. United India Insurance Company Limited and Others, 2008 (8) SCC 165, in which, Hon'ble Supreme Court held as under:- “18. It is beyond any doubt or dispute that only in the event an application for renewal of licence is filed within a period 30 days from the date of expiry thereof, the same would be renewed automatically which means that even if an accident had taken place within the aforementioned period, the driver may be held to be possessing a valid licence. The proviso appended to sub-section (1) of Section 15, however, clearly states that the driving licence shall be renewed with effect from the date of its renewal in the event the application for renewal of a licence is made more than 30 days after the date of its expiry. It is, therefore, evident that as, on renewal of the licence on such terms, the driver of the vehicle cannot be said to be holding a valid licence, the insurer would not be liable to indemnify the insured. The second proviso appended to sub-section (4) of Section 15 is of no assistance to the appellant. It merely enables the licensing 14 authority to take a further test of competent driving and passing thereof to its satisfaction within the meaning of Sub-section (3) of Section 9. It does not say that the renewal would be automatic. It is, therefore, a case where a breech of the contract of insurance is established. This aspect of the matter has been considered by this Court in National Insurance Co. Ltd. v. Kusum Rai & Ors. [(2006) 4 SCC 250] holding : “11. It has not been disputed before us that the vehicle was being used as a taxi. It was, therefore, a commercial vehicle. The driver of the said vehicle, thus, was required to hold an appropriate licence therefor. Ram Lal who allegedly was driving the said vehicle at the relevant time, as noticed hereinbefore, was holder of a licence to drive a light motor vehicle only. He did not possess any licence to drive a commercial vehicle. Evidently, therefore, there was a breach of condition of the contract of insurance. The appellant, therefore, could raise the said defence.” It was furthermore held :