SRI. SURESH SEERVI v. THE MANAGER

2. MR. GANGADHAR B., S/O BORAIAH, MAJOR, R/AT NO. 170, BYRAPPA VILLAGE MALUR POST, CHANNAPATNA TALUK, RAMANAGARA DISTRICT. - 2 - NC: 2024:KHC:31285 MFA No. 439 of 2022 (BY SRI. H.C. BETSUR, ADVOCATE FOR R1; R2- SERVED, UNREPRESENTED) …RESPONDENTS THIS MFA FILED U/S.173(1) OF MV ACT, AGAINST THE JUDGMENT AND AWARD DATED 18.10.2021 PASSED IN MVC NO.4627/2019 ON THE FILE OF THE I ADDITIONAL SMALL CAUSES JUDGE, MACT, BENGALURU, (SCCH-11), PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION. THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA ORAL JUDGMENT Heard Sri.K.V.Naik learned counsel for the appellant and also Sri.H.C.Betsur, learned counsel for respondent No.1.

2. Challenge in this appeal is the order that is rendered by the Motor Accidents Claims Tribunal, Bengaluru in MVC No.4627/2019 dated 18.10.2021. This is a claimant's appeal. The Tribunal through the impugned order dismissed the claim petition as far as respondent No.1 is concerned. The Tribunal fastened the liability against respondent No.2 i.e., owner of the offending - 3 - NC: 2024:KHC:31285 MFA No. 439 of 2022 vehicle. Awarding compensation of Rs.5,50,400/- in total, the Tribunal directed respondent No.2/owner of the offending vehicle to pay the same to the appellant.

3. With a submission that the insurance company i.e., respondent No.1 is equally liable to pay the compensation, learned counsel contends that even if the respondent No.2 i.e., owner of the offending vehicle had violated the terms and conditions of the policy, the insurance company is liable to pay the compensation to the appellant as the appellant is the third party to the insurance policy. Learned counsel states that the Tribunal therefore, ought to have ordered respondent No.1 insurance company to pay compensation to the appellant.

4. Vehemently opposing the submission thus made, Sri.H.C.Betsur, learned counsel for respondent No.1 submits that the driver of the offending vehicle was not holding the driving license to drive the said vehicle at the time of the accident. Learned counsel contends that observing the said fact, the Tribunal rightly fastened the - 4 - NC: 2024:KHC:31285 MFA No. 439 of 2022 liability against the owner and absolved the insurance company from liability.

5. Learned counsel Sri.H.C.Betsur also submits that Ex.P7-Charge sheet reveals that the investigating officer gave a finding that the driver of the offending vehicle has committed the offences punishable under Sections 279 and 338 of IPC and also 134A, 134B read with Section 187 of Motor Vehicles Act. Learned counsel contends that the driver of the offending vehicle violated Sections 3 and 5 of the Motor Vehicles Act. Learned counsel also states that as respondent No.2 i.e, owner of the offending vehicle had entrusted the vehicle to the person who does not hold driving license to drive the said vehicle and as the same is in violation of the terms and conditions of the policy, the Tribunal has rightly ordered the owner of the vehicle to pay the compensation. Learned counsel thereby contends that the order of the Tribunal needs no interference. - 5 - NC: 2024:KHC:31285 MFA No. 439 of 2022

6. It is not in dispute that the driver of the offending vehicle was not in possession of valid and effective license to drive the said vehicle as on the date of the accident. However, learned counsel for the appellant Sri.K.V.Naik, seeking the Court to order for pay and recovery, relies upon the decision of the Hon'ble Apex Court in the case between Pappu and others Vs. Vinod Kumar Lamba and another reported in 2018 ACJ 690. In the said decision, their lordship observed as follows: "14. The next question is: whether in the fact situation of this case the insurance company can be and ought to be directed to pay the claim amount, with liberty to recover the same from the owner of the vehicle (respondent No.1)? This issue has been answered in the case of National Insurance Company Ltd. (AIR 2014 SC 1531) (supra). In that case, it was contended by the insurance company that once the defence taken by the insurer is accepted by the Tribunal, it is bound to discharge the insurer and fix the liability only on the owner and/or the driver of the vehicle. However, this Court held that even if the insurer succeeds in establishing its defence, the Tribunal or the Court can direct the insurance company to pay the award amount to the claimant(s) and, in turn, recover the same from the owner of the vehicle. The three-Judge Bench, after analysing the earlier decisions on the point, held that there was no reason to deviate from the said well-settled principle. In paragraph 107, the Court then observed thus: “We may, however, hasten to add that the Tribunal and the court must, however, exercise their jurisdiction to - 6 - NC: 2024:KHC:31285 MFA No. 439 of 2022 issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued, despite arriving at a finding of fact to the effect that the insurer has been able to establish that the insured has committed a breach of contract of insurance as envisaged under sub-clause (ii) of clause (a) of sub-section (2) of Section 149 of the Act, the insurance company shall be entitled to realize the awarded amount from the owner or driver of the vehicle, as the case may be, in execution of the same award having regard to the provisions of Sections 165 and 168 of the Act. However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it has not been able to do so, the insurance company may initiate a separate action therefore against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given an opportunity to defend at all. Such a course of action may also be resorted to when a fraud or collusion between the victim and the owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage.” Further, in paragraph No.110, the Court observed thus:

110. The summary of our findings to the various issues as raised in these petitions are 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 be so interpreted as to effectuate the said object. (ii) Insurer is entitled to raise a defence in a claim petition filed under Section 163A 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 driver or invalid driving licence of the driver, as contained in Sub-section (2)(a)(ii) of Section 149, have to be proved to have been committed by the insured for - 7 - NC: 2024:KHC:31285 MFA No. 439 of 2022 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, (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 where for would be on them. (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. (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. (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. (viii) xxx (ix) xxx (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 Sub-section (7), - 8 - NC: 2024:KHC:31285 MFA No. 439 of 2022 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 proviso thereunder and Sub-section (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 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.” (emphasis supplied)

15. In the present case, the owner of the vehicle (respondent No.1) had produced insurance certificate indicating that vehicle No. DIL- 5955 was comprehensively insured by the respondent No.2 (Insurance Company) for unlimited liability. Applying the dictum in the case of National Insurance Company Ltd. (supra), to subserve the ends of justice, the insurer (respondent No.2) shall pay the claim amount awarded by the Tribunal to the appellants in the first instance, with liberty to recover the same from the owner of the vehicle (respondent No.1) in accordance with law.

16. Accordingly, the appeal is allowed to the extent that the compensation amount awarded by the Tribunal and confirmed by the High Court shall be paid and satisfied by the insurer (respondent No.2) in the first instance, - 9 - NC: 2024:KHC:31285 MFA No. 439 of 2022 with liberty to recover the same from the owner of the vehicle (respondent No.1) in accordance with law."

7. Thus by the aforesaid decision it is clear that even if the insured had violated the terms and conditions of the policy by entrusting the offending vehicle to a person having defective/no driving license, the insurer is at liability to pay the compensation and thereafter recover the same from the owner of the offending vehicle. Therefore, this Court is of the view that the pay and recovery as sought for is required to be Ordered.

8. Coming to the quantum of compensation that is awarded, though the learned counsel for the appellant states that the compensation awarded under each head is grossly low, this Court is of the view that, having regard to the nature of injury sustained, the Tribunal has given reasons for the conclusions arrived at more particularly with respect to the amount that is required to be awarded as compensation. This Court does not find any grounds to interfere with the well reasoned findings. - 10 - NC: 2024:KHC:31285 MFA No. 439 of 2022

9. Thus, in the light of the foregoing discussion, the following: ORDER (i) Appeal is allowed in part. (ii) Respondent No.1 is directed to deposit the compensation that is awarded by the Tribunal within a period of 8(eight) weeks from the date of receipt of copy of this order. (iii) The amount awarded as compensation shall carry interest at the rate of 6% p.a. from the date of petition till the date of deposit. (iv) Respondent No.1/Insurer is granted liberty to recover the amount paid from respondent No.2/owner of the offending vehicle by initiating appropriate proceedings to that effect. Sd/ (DR.CHILLAKUR SUMALATHA) JUDGE NS CT:TSM List No.: 1 Sl No.: 67