The Oriental Insurance Company Limited, G.T. Jalandhar, Post Box v. No.109-111, Sector 17-D, Chandigarh

Smt. Resham Kaur widow of Maghar Ram and others

2. FAO No.1404 of 1995 .......Respondents The Oriental Insurance Company Limited, G.T. Jalandhar, Post Box No.69, Jalandhar (insurer) through Manager Regional Office, SCO No.109-111, Sector 17-D, Chandigarh .........Appellant Versus Smt. Parsini widow of Sh. Ram Chand and others .......Respondents Present: Mr. N.K. Khosla, Advocate for the appellant. None for the respondents. CORAM:HON'BLE MR. JUSTICE K. KANNAN

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? -.- K. KANNAN J.(ORAL)

1. Both the appeals are at the instance of the insurance company against the judgment of the MACT against the liability cast on it, in spite of the fact that the driver who drove the vehicle was proved to have had a fake driving licence.

2. The liability of the Insurance Co in a case of a fake licence or a renewal of a licence which was a fake one have been considered FAO No.1403 of 1995 -2- by the Hon’ble Supreme Court in several cases and the decisions in National Insurance Co v Swaran Singh (2004) 3 SCC 297 a-nd United Indian Insurance v Divinder Singh (2007) 8 SCC 342 are instructive. In the latter judgment, it has been held that a renewal of a fake driving licence is no licence at all and hence the insurer shall not be liable.

3. It was even held earlier by the Hon’ble Supreme Court, while referring to the effect of a renewal of forged licence, in New India Assurance Co., Shimla v. Kamla,(2001) 4 SCC 342:

13. The observation of the Division Bench of the Punjab and Haryana High Court in National Insurance Co. Ltd. v. Sucha Singh that renewal of a document which purports to be a driving licence, will robe even a forged document with validity on account of Section 15 of the Act, propounds a very dangerous proposition. If that proposition is allowed to stand as a legal principle, it may, no doubt, thrill counterfeiters the world over as they would be encouraged to manufacture fake documents in a legion. What was originally a forgery would remain null and void forever and it would not acquire legal validity at any time by whatever process of sanctification subsequently done on it. Forgery is antithesis to legality and law cannot afford to validate a forgery.

4. The judgment of the Supreme Court in Swaran Singh (supra) has an immediate relevance for us in this case for the effect of proof of fake licence in the context of the need for discharging the burden of proof on the Insurance company that the insured had committed a breach of terms of the policy. The fact that the driver had a fake licence will absolve the insurer of the liability of the insurer only, if it is established that the accident was on account of reasons where the possession of valid driving licence will have relevance for consideration of the aspect of negligence that has FAO No.1403 of 1995 -3- to be proved. If the accident was on account of say, mechanical defect in the vehicle, the issue of the validity of licence will have no relevance. The Hon’ble Court had said,

31. The right of the victim of a road accident to claim compensation is a statutory one. He is a victim of an unforeseen situation. He would not ordinarily have a hand in it. The negligence on the part of the victim may, however, be contributory. He has suffered owing to wrongdoing of others. An accident may ruin an entire family. It may take away the only earning member. An accident may result in the loss of her only son to a mother. An accident may take place for a variety of reasons. The driver of a vehicle may not have a hand in it. He may not be found to be negligent in a given case. Other factors such as unforeseen situation, negligence of the victim, bad road or the action or inaction of any other person may lead to an accident.

64. There may be a case where an accident takes place without there being fault on the part of the driver. In such an event, the question as to whether a driver was holding a valid licence or not would become redundant. (See Jitendra Kumar v. Oriental Insurance Co. Ltd.)

65. Skandia, on the other hand, has been approved by a three-Judge Bench, when the correctness thereof was referred to a larger Bench in Sohan Lal Passi case wherein a three- Judge Bench of this Court noticed the ratio propounded in Skandia case8 and observed: “In other words, once there has been a contravention of the condition prescribed in sub-section (2)(b)(ii) of Section 96, the person insured shall not be entitled to the benefit of sub- section (1) of Section 96. According to us, Section 96(2)(b)(ii) should not be interpreted in a technical manner. Sub-section (2) of Section 96 only enables the insurance company to defend itself in respect of the liability to pay compensation on any of the grounds mentioned in sub-section (2) including that there has been a contravention of the condition excluding the vehicle being driven by any person who is not duly licensed. This bar on the face of it operates on the person insured. If the person who has got the vehicle insured has allowed the vehicle to be driven by a person who is not duly licensed then only that clause shall be attracted. In a case where the person who has got insured the vehicle with the insurance company, has appointed a duly licensed driver and if the accident takes place when the vehicle is being driven by a person not duly licensed on the basis of the authority of the driver duly authorised to drive the vehicle whether the insurance company in that event shall be absolved from its liability? The FAO No.1403 of 1995 -4- expression ‘breach’ occurring in Section 96(2)(b) means infringement or violation of a promise or obligation. As such the insurance company will have to establish that the insured was guilty of an infringement or violation of a promise. The insurer has also to satisfy the Tribunal or the court that such violation or infringement on the part of the insured was wilful. If the insured has taken all precautions by appointing a duly licensed driver to drive the vehicle in question and it has not been established that it was the insured who allowed the vehicle to be driven by a person not duly licensed, then the insurance company cannot repudiate its statutory liability under sub-section (1) of Section 96.” (underlining supplied)

66. A bare perusal of the provisions of Section 149 of the Act leads to only one conclusion that the usual rule is that once the assured proves that the accident is covered by the compulsory insurance clause, it is for the insurer to prove that it comes within an exception. These observations in Swaran Singh’s case show that the proof of fake licence does not conclude the issue. The conscious act of the insured in the complicity with the driver in securing a fake licence may exclude liability. But if the insured had made bona fide enquiries and he was under the belief that the driving licence shown by the driver at the time of employment or immediately afterwards but before the accident was a genuine one, though it was fake, it could not be said that the insured had committed any breach of the terms of the policy. Swaran Singh’s case (supra) states as follows:

75. As has been held in Sohan Lal Passi the insurance company cannot shake off its liability to pay the compensation only by saying that at the relevant point of time the vehicle was driven by a person having no licence. ………………..

84. We have analysed the relevant provisions of the said Act in terms whereof a motor vehicle must be driven by a person having a driving licence. The owner of a motor vehicle in terms of Section 5 of the Act has a responsibility to see that no vehicle is driven except by a person who does not satisfy the provisions of Section 3 or 4 of the Act. In a case, therefore, where the driver of the vehicle, admittedly, did not hold any licence and the same was allowed consciously to FAO No.1403 of 1995 -5- be driven by the owner of the vehicle by such person, the insurer is entitled to succeed in its defence and avoid liability. The matter, however, may be different where a disputed question of fact arises as to whether the driver had a valid licence or where the owner of the vehicle committed a breach of the terms of the contract of insurance as also the provisions of the Act by consciously allowing any person to drive a vehicle who did not have a valid driving licence. In a given case, the driver of the vehicle may not have any hand in it at all e.g. a case where an accident takes place owing to a mechanical fault or vis major. (See Jitendra Kumar.)

5. In has been brought out in evidence that the owner at the time of employing his driver Najinder Singh had looked at the licence and believed that the same was genuine. The Tribunal has observed that the owner could have known that it was fake, no matter it was proved by examination of the local commissioner, who had secured on personal inspection that the entry in the licence was fake.

6. The claim of exclusion of liability by the Insurance Co cannot be accepted and the appeals are dismissed. July 29, 2010 Pankaj* (K. KANNAN) JUDGE