Kerala High Court · 2008

J.B. Koshy & K.Hema, JJ.-------------------------------------- M.F.A. No. 288 of 2003---------------------------------------Dated this the 6th day of February, 2008 Judgment Koshy,J.This appeal is filed by the insurance company.Contention raised by the insurance company was that the driver ofthe offending vehicle insured by it had no valid driving licence. Asper the charge sheet the earlier licence expired before the date ofaccident, that is, 2.5.1996. It was renewed only on 2.5.1996.Therefore, according to the appellant, on the date of accident, therewas no driving licence. The Apex Court in Narcinva V. Kamat andanother v. Alfredo Antonio Doe Martins and others (1985 ACJ 397SC) held as follows:"12. It is contended on behalf of theinsurance company that the second appellantdid not have a valid driving licence. It is theinsurance company which complains that therehas been a breach of one of the important termsof the contract of insurance as evidenced by thepolicy of insurance (the whole of which was notshown to us) and that the second appellant whowas shown to be driving the vehicle at therelevant time, did not have a valid drivinglicence to drive the pick-up van. The insurance M.F.A.No. 288/20032company complains of breach of a term ofcontract which would permit it to disown itsliability under the contract of insurance. If abreach of a term of contract permits a party tothe contract to not to perform the contract, theburden is squarely on that party whichcomplains of breach to prove that the breachhas been committed by the other party to thecontract. The test in such a situation would bewho would fail if no evidence is led. Thelanguage and the format in which issue Nos.7and 8 have been cast by the Tribunal clearlycasts the burden of proof on the insurancecompany. Not an iota of evidence has been ledby the insurance company to show that thesecond appellant did not have a valid drivinglicence to drive the vehicle."In this case, the driver had valid licence before the date of accidentand there is no case to establish that absence of the driving licencewas the cause of accident. In Jitendra Kumar v. Oriental InsuranceCo. Ltd. and another ((2003) 6 SCC 420) the Apex Court held asfollows:"9. .................... The question then is: canthe Insurance Company repudiate a claim madeby the owner of the vehicle which is dulyinsured with the Company, solely on the groundthat the driver of the vehicle who had nothing todo with the accident did not hold a validlicence? The answer to this question, in ouropinion, should be in the negative. Section 149of the Motor Vehicles Act, 1988 on whichreliance was placed by the State Commission, inour opinion, does not come to the aid of theInsurance Company in repudiating a claimwhere the driver of the vehicle had notcontributed in any manner to the accident. M.F.A.No. 288/20033Section 149 (2) (a) (ii) of the Motor Vehicles Actempowers the Insurance Company to repudiatea claim wherein the vehicle in question isdamaged due to an accident to which driver ofthe vehicle who does not hold a valid drivinglicence is responsible in any manner. It does notempower the Insurance Company to repudiate aclaim for damages which has occurred due toacts to which the driver has not, in any manner,contributed i.e., damages incurred due toreasons other than the act of the driver." No evidence was also adduced by the insurance company to showthat absence of driving licence is the cause of accident. Exceptrelying on the police records, there is no evidence to show that eventhough such a charge was made that he was convicted for theoffence. Burden is on the insurance company to prove that there isviolation of the policy of insurance. (See: National InsuranceCompany Ltd. v. Swaran Singh and others - AIR 2004 SC 1531).A three-member Bench of the apex Court after extensivelyconsidering all the earlier decisions, summarised the law as follows:"105. (i) Chapter XI of the Motor VehiclesAct, 1988 providing compulsory insurance ofvehicles against third party risks is a socialwelfare legislation to extend relief bycompensation to victims of accidents caused byuse of motor vehicles. The provisions ofcompulsory insurance coverage of all vehiclesare with this paramount object and theprovisions of the Act have to be so interpretedas to effectuate the said object. M.F.A.No. 288/20034(ii) Insurer is entitled to raise a defence ina claim petition filed under section 163-A orsection 166 of the Motor Vehicles Act, 1988 interalia in terms of section 149 (2) (a) (ii) of the saidAct.(iii) The breach of policy condition e.g.disqualification of driver or invalid driving licenceof the driver, as contained in sub-section (2) (a)(ii) of section 149, have to be proved to havebeen committed by the insured for avoidingliability by the insurer. Mere absence, fake orinvalid driving licence or disqualification of thedriver for driving at the relevant time, are not inthemselves defences available to the insureragainst either the insured or the third parties.To avoid its liability towards insured, the insurerhas to prove that the insured was guilty ofnegligence and failed to exercise reasonablecare in the matter of fulfilling the condition ofthe policy regarding use of vehicles by dulylicensed driver or one who was not disqualifiedto drive at the relevant time.(iv) The insurance companies are,however, with a view to avoid their liability mustnot only establish the available defence (s)raised in the said proceedings but must alsoestablish 'breach' on the part of the owner of thevehicle; the burden of proof wherefore would beon them.(v) The court cannot lay down any criteriaas to how said burden would be discharged,inasmuch as the same would depend upon thefacts and circumstances of each case. (vi) Even where the insurer is able to provebreach on the part of the insured concerning thepolicy condition regarding holding of a validlicence by the driver or his qualification to driveduring the relevant period, the insurer would not M.F.A.No. 288/20035be allowed to avoid its liability towards insuredunless the said breach or breaches on thecondition of driving licence is/are sofundamental as are found to have contributed tothe cause of the accident. The Tribunals ininterpreting the policy conditions would apply'the rule of main purpose' and the concept of'fundamental breach' to allow defencesavailable to the insured under section 149 (2) ofthe Act. .................................." (rest not veryrelevant)The two-member Bench decision in Oriental Insurance Co. Ltd. v.Meena Variyal and others ((2007) 5 SCC 428) and NationalInsurance Co. Ltd. v. Laxmi Narain Dhut ((2007) 3 SCC 700) holdingthat absence of licence is a violation of policy condition were citedby the learned counsel for the insurance company. But, in thosecases, the three-member Bench decision in Swaran Singh's case(supra) was followed, but, the court distinguished the abovedecision as injured was an employee of the owner and passengerand he was not a third party. In this case, claimant is a third partyand the tribunal found that there was no violation of the policycondition on the basis of evidence adduced. It is a finding of fact.Even if contention of the appellant is accepted, the amount due tothe third party liability has to be ordered to be deposited by theinsurer and recovered from the insured as held by the Apex Court inUnited India Insurance Co. Ltd. v. Lehru & ors. (AIR 2003 SC 1292). M.F.A.No. 288/20036Notice is not served on the second respondent, the insured in thiscase so far. So, without serving notice, we cannot issue such adirection. In any event, appellant was not able to prove that there isviolation of the policy condition.In the above circumstances, we dismiss the appeal. J.B.Koshy Judge K. Hema Judge vaa M.F.A.No. 288/20037 J.B. KOSHY ANDK.HEMA ,JJ.-------------------------------------M.F.A. No. 288 of 2003 ------------------------------------- JudgmentDated:6th February, 2008