JOHNSON v. NATIONAL INSURANCE CO. LTD.

HARUN-UL-RASHID, J.------------------------M.A.C.A.No.262 Of 2010----------------------Dated this the 17th day of July, 2012.J U D G M E N TThe 2nd respondent National Insurance Company is theappellant. The appeal is directed against the award in O.P.(MV).No.1632/1999 on the file of the M.A.C.T, Pathanamthitta. TheTribunal, by the impugned award, allowed the claim in partallowing the claimant to recover a sum of Rs.57,300/- ascompensation with 7.5% interest. The parties hereinafter arereferred to as the claimant and respondents as arrayed in theclaim petition. 2.The Insurance Company contested the claim petitionon merits. The Tribunal found that the accident was occurreddue to the rash and negligent driving of the motor cycle by theadditional 3rd respondent. The 1st respondent is the owner of thevehicle. Ext.B1 is the comprehensive policy. The InsuranceCompany inter alia contended that on the date of the accidentthe rider of the motor cycle, the additional 3rd respondent washaving no driving licence and thereby the 1st respondent insured ::2::M.A.C.A.No.262/2010violated the policy conditions. From the materials available, theTribunal found that on the date of the accident, the additional 3rdrespondent, the rider of the offending vehicle, was having novalid driving licence. The Tribunal further held that the law iswell settled that if the insurer succeeded in proving the breach ofterms of policy on the part of the owner of the vehicle, theinsurer can recover the amount paid in favour of the third partyin order to satisfy the award from the owner/insured of thevehicle. The Tribunal held that the 1st respondent and theadditional 3rd respondent are jointly and severally liable tocompensate the claimant and that being the insurer of theoffending vehicle the 2nd respondent Insurance Company is liableto satisfy the award in favour of the petitioner at the firstinstance since the claimant is a third party. The Tribunal furtherheld that since there is breach of policy conditions on the part ofthe 1st respondent owner, the 2nd respondent Insurance Companyis having liberty to recover the amount from the 1st respondentowner. ::3::M.A.C.A.No.262/20103.The learned counsel for the appellant contended beforethis Court that the direction issued by the Tribunal directing theInsurance Company to satisfy the award in favour of the claimantat the first instance and then to recover the compensationamount from the 1st respondent owner is not legally sustainable.According to the learned counsel the Insurance Company ishaving no liability in the of this nature and therefore, the Tribunalshould have exonerated the company from making payment tothe claimant. The learned counsel also relied on the decisionsreported in National Insurance Company v. VidyadharMahariwala and others (AIR 2009 SC 208) and IshwarChandra and others v. Oriental Insurance Co.Ltd. andothers (2007(10) SCC 650). 4.The Apex Court in National Insurance CompanyLtd. v. Swaran Singh (2004(1) KLT 781(SC)) considered asimilar issue. The relevant extract in paragraph 102 (iii) isquoted below:“(iii)The breach of policy conditions, e.g.,disqualification of driver or invalid driving licence of the ::4::M.A.C.A.No.262/2010driver, as contained in sub-s.(2)(a)(ii) of S.149, have tobe proved to have been committed by the insured foravoiding liability by the insurer. Mere absence, fake orinvalid driving licence or disqualification of the driver fordriving at the relevant time, are not in themselvesdefences available to the insurer against either theinsured or the third parties. To avoid its liability towardsinsured, the insurer has to prove that the insured wasguilty of negligence and failed to exercise reasonablecare in the matter of fulfilling the condition of the policyregarding use of vehicles by duly licensed driver or onewho was not disqualified to drive at the relevant time”.The principle laid down in the above said decision was followed bythe Supreme Court in Kusum Lata and others v. Satbir andothers (AIR 2011 SC 1234). The Apex Court held that to avoidits liability towards insured, the insurer has to prove that theinsured was guilty of negligence and failed to exercise reasonablecare in the matter of fulfilling the condition of the policyregarding use of vehicles by duly licensed driver or one who wasnot disqualified to drive at the relevant time. The Supreme Courtheld that mere absence, fake or invalid driving licence ordisqualification of the driver for driving at the relevant time, are ::5::M.A.C.A.No.262/2010not in themselves defences available to the insurer against eitherthe insured or the third parties. Regarding the liability, theInsurance Company is liable to satisfy the award in favour ofthird party at the first instance and then to recover the awardamount from the owner or driver of the vehicle even where theinsurer could establish breach of terms of policy on the part ofthe owner of the vehicle. The Supreme Court held as follows:“The insurance company may not be liable tosatisfy the decree and, therefore, its liability may bezero but it does mean that it did not have initial liabilityat all. Thus, if the insurance company is made liable topay any amount, it can recover the entire amount paidto the third party on behalf of assured. If thisinterpretation is not given to the beneficent provisionscan be given effect to Sub.s.(7) of S.149 of the Act, towhich pointed attention of the court has been drawn bylearned counsel for the petitioner, which is in negativelanguage may now be noticed. The said provision mustbe read with sub-s.(1) thereof”. ::6::M.A.C.A.No.262/20105.In the light of the principles laid down in the abovereferred cases, I fully agree with the findings and directionsrecorded by the Tribunal.In the result, the appeal fails and accordingly dismissed. Noorder as to costs. HARUN-UL-RASHID, Judge.bkn/-