The High Court
Case Details
- 1 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE T.M.NADAF MISCELLANEOUS FIRST APPEAL NO.3097 OF 2017 BETWEEN: (MV-D) NATIONAL INSURANCE COMPANY LTD., MOTOR CLAIMS HUB NO.144, 2ND FLOOR, SHUBHARAM COMPLEX, M.G.ROAD, BANGALORE - 560 001. REPRESENTED BY ITS MANAGER. (BY SRI. RENUKA H R, ADVOCATE) …APPELLANT Digitally signed by MADHUSHREE H Location: High Court of Karnataka AND: 1. M KRISHNOJI RAO S/O MUNNOJI RAO AGED ABOUT 40 YEARS, 2. SHAKUNTALA BAI W/O M.KRISHNOJI RAO, AGED ABOUT 34 YEARS, BOTH ARE R/AT C/O NO.138, GOPALA RAO COMPOUND, HOOVADIGARA BEEDHI, NEAR VENKATESHWARA SWEET STALL, MASCO COMPLEX, VARTHUR, BANGALORE - 560 087. 3. G M AKRAM S/O AHMED USMAN, AGED ABOUT 40 YEARS, - 2 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 R/AT NO.13, INDIRANAGAR, MASTHI, MALUR TALUK, KOLAR DISTRICT - 563 130. (BY SRI. P S KAILAS SHANKAR, ADVOCATE FOR R1 & R2; VIDE ORDER DATED 31.03.2021, NOTICE HELD SUFFICIENT IN R/O OF R3) …RESPONDENTS THIS MFA IS FILED UNDER SECTION 173(1) OF MV ACT PRAYING TO SET ASIDE THE JUDGMENT AND AWARD DATED 27.01.2017 PASSED IN MVC NO.974/2015 PASSED BY THE MOTOR ACCIDENT CLAIMS TRIBUNAL, COURT OF SMALL CAUSES, BENGALURU CONSEQUENTLY DISMISS THE CLAIM PETITION IN THE INTEREST OF JUSTICE AND EQUITY. THIS APPEAL COMING ON FOR FINAL HEARING THIS DAY JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE T.M.NADAF ORAL JUDGMENT This appeal is by the appellant / insurance company challenging the compensation awarded by the Tribunal in MVC.No.974/2015, dated 27.01.2017, passed by the Motor Accident Claims Tribunal, Court of Small Causes, Bangalore. The challenge is in a narrow compass only to the extent of absolute liability fastened on the insurance company. - 3 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 2. The parties shall be referred as per their rankings before the Tribunal for easy reference. 3. It is undisputed that the accident occurred on 06.07.2014, wherein a 8 year old boy Master Prashanth Rao @ Prashanth Kumar, suffered fatal injuries and succumbed to the injuries on 18.09.2014 while under treatment. It is also undisputed that the respondents/claimants incurred a sum of Rs.3,99,683/- towards medical expenses. The only point raised by the appellant – insurance company is with regard to fastening of the entire liability on the insurance company to make good the compensation by indemnifying the owner of the offending vehicle. 4.
Legal Reasoning
Smt.H.R.Renuka, learned counsel appearing for the appellant vehemently submits that the Tribunal has failed to take into consideration of the facts that the owner of the offending vehicle appeared through a counsel, however, has not filed any written statement. The - 4 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 insurance company has specifically denied the license of the driver of the offending vehicle. The owner of the vehicle has not produced copy of the driving license to seek indemnity from the insurance company. She further submits that in the charge-sheet, the Police have not invoked Sections-3 and 180 of Motor Vehicles Act. In order to discharge the burden on the insurance company, the Investigating Officer of the case by name Sri.R.Chandrashekar, ASI, Masthi Police Station has been examined as RW-1 and he had stated that the Driver of the offending vehicle contended that he had license to drive the vehicle and also produced a copy of the Driving License. However, the same was not marked for want of original. It is the further contention of the learned counsel for the appellant – insurance company that during the pendency of the matter before the Tribunal, an application was filed seeking permission to examine the RTO of KGF. However, when the RTO was summoned, an endorsement was given on the summons stating that the Driving License does not pertain to their office. - 5 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 5. The Tribunal has failed to consider these aspects and the fact that the insurance company has discharged its burden on the Driving License. However, the owner of the vehicle though appeared neither filed the written statement nor filed any document regarding the driving license. As such, failed to discharge the burden casted upon it and therefore the Tribunal ought to have taken adverse inference against the owner of the vehicle. 6. In the case on hand, since service of notice could not be effected in the ordinary course, a paper publication was sought and ordered. Accordingly, the notice was issued through paper publication. This Court on 31.03.2021 passed an order on service through paper publication, wherein the respondent No.3 was called out as he being absent, notice on respondent No.3 was held sufficient. 7. Heard the learned counsel for the appellant – insurance company and the learned counsel for the claimants and perused the trial court records. The only - 6 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 point that emerges for consideration on the contention of the parties is as follows: i) Whether the Tribunal is right in fastening the absolute liability on the insurance company in the absence of the respondent No.1 – owner of the offending vehicle having failed to discharge the burden casted upon him. 8. My answer to the above point is partly in affirmative, for the following reasons: 9. It is not in dispute that the deceased was a third party. The accident occurred due to the rash and negligent driving of the offending vehicle by its driver. Though the Police have not charge-sheeted the driver of the offending vehicle under Sections-3 and 180 of MV Act, however, it was on record that the insurance company examined, the Investigating Officer for non-inclusion of the aforesaid sections. 10. Though the owner of the vehicle appeared through the learned counsel, however neither filed written - 7 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 statement nor produced copy of the driving license to discharge the burden casted upon him to show that the driver of the offending vehicle was possessing a valid driving license as on the date of the accident. Mere fact that the insurance policy was valid and existing at the time of the accident will not absolve the burden on the owner of the offending vehicle to prove his case in order to satisfy the conditions stated in the insurance policy. One of the condition as such, is possessing of a valid and existing driving license of the driver of the offending vehicle, at the time of accident. In the absence of the proof of the driving license the Tribunal ought to have taken an adverse inference against the insurance company. In view of the same, the finding of the Tribunal at para-21 of its judgment that the insurance company is liable to indemnify the insured in view of existence of valid insurance policy at the time of the accident, is erroneous and requires interference. To that extent, the finding of the Tribunal fastening the absolute liability on the insurance company requires to be set-aside. - 8 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 11. The Hon’ble Apex Court in the case of Pappu And Others vs. Vinod Kumar Lamba And Others1, at paragraph Nos.15 to 20 held as follows: “15. Be that as it may, no grievance about the quantum of compensation awarded by the Tribunal has been made by the appellants – claimants (either before the High Court or before us in this appeal). Hence, that issue does not warrant any scrutiny. Similarly, the owner of the vehicle (respondent No.1) has not challenged the findings of the Tribunal as affirmed by the High Court in favour of the insurer (respondent No.2), including on the factum that the vehicle was driven by a person who did not have a valid driving licence at the relevant time. 16. 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. (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 1 (2018) 3 SCC 208 - 9 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 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 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 therefor - 10 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 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: 17. 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. - 11 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 (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 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 - 12 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 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 fulfill 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), 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 - 13 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 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) 18. In the present case, the owner of the vehicle (respondent No.1) had produced the 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 - 14 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 (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. 19. 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, with liberty to recover the same from the owner of the vehicle (respondent No.1) in accordance with law. 20. 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 with liberty to recover the same from the owner of the vehicle(Respondent No.1) in accordance with law. 12. The Hon’ble Apex Court in the aforesaid judgment held that the insurance company is primarily liable to pay the compensation to the claimants and to recover the same from the owner of the offending vehicle when the third party interest is involved. In view of the law laid down by the Hon’ble Apex Court, the insurance company is primarily liable to pay the compensation to the - 15 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 respondents – claimants with a liberty to recover the same from the owner of the offending vehicle. 13. For the foregoing reasons, this Court proceeds to pass the following:
Decision
ORDER i) The appeal is allowed-in-part. ii) The judgment and award passed by the Tribunal in MVC.No.974/2015, dated 27.01.2017, is hereby modified insofar as fastening of absolute liability on the insurance company. The insurance company is directed to pay the award amount along with interest as determined by the Tribunal with liberty to recover the same. iii) The appellant - insurance company shall deposit the entire compensation awarded by the Tribunal along with interest at 8% p.a., from the date of filing of the petition till the date of realization, - 16 - NC: 2025:KHC:13438 MFA No. 3097 of 2017 within six weeks from the date of receipt of a copy of this order. iv) The amount in deposit before this Court be transferred to the concerned Tribunal for disbursement. v) Disbursement as well as apportionment of the compensation amount shall be in terms of the order passed by the Tribunal. Sd/- (T.M.NADAF) JUDGE JJ List No.: 1 Sl No.: 7