United India Insurance Company Ltd v. Ramesh Kumar & Ors.

Judgment

1. The Insurance Co is in appeal 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 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 F.A.O.NO. 357 OF 1998 2 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 F.A.O.NO. 357 OF 1998 3 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 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.) F.A.O.NO. 357 OF 1998 4

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 expression ‘breach’ occurring in Section 96 (2)(b) means infringement or violation of a F.A.O.NO. 357 OF 1998 5 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: F.A.O.NO. 357 OF 1998 6

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 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. The owner of the truck had given evidence Ex. RW-3 that he had seen the driving licence of the driver produced before F.A.O.NO. 357 OF 1998 7 him and a copy of which was produced before Court Ex. D-1. The Tribunal held that there was nothing to show that Ex. D-1 was

fake. Learned counsel appearing for the insurer argues that this document is produced after the insurance company closed its evidence and during the time when the clerk from the Licensing Authority gave evidence that he was cross examined by the owner or the driver to say that the particular license copy seized by the police and produced from the criminal courts did not belong to him nor was the copy of Ex. D-1 confronting to the Licencing Authority as the only valid driving license. Although the owner keeps the document Ex.D-1. There was no reason why the insurer still did not take steps to secure the register from the authority. It is no argument that since the Insurance Company had closed its evidence it could not take such steps. If there was an occasion for the insurer to reopen the case to call the insured this was it when it ought to have applied for the opening of the evidence and secure appropriate evidence by summoning the register from the authority and showed that Ex D-1 was also a fake. The burden of proof on the insurer is never discharged by an assumption. Only one licence could be there and if there are two documents on record both of them must be taken to be fake. In this case, if the insured had produced a copy of the license had also given evidence that he had seen the original when the driver produced it, with the issue as far as the owner is concerned, the insurer escapes liability only if he shows the breach of terms of policy by the insured. Breach shall be of the F.A.O.NO. 357 OF 1998 8 insured not merely fraudulent act by a driver. Such a fradulent act will have a bearing if only the insured had also a part in such a fraud. If the insured gave evidence on his own conduct of securing the copy of the licence had also verified that he had driving licence, the matter must rest there and there is no scope for the insurer to plead exclusion of liability.

6. The claim of exclusion of liability by the Insurance Co. cannot be accepted. The appeal is dismissed. 19th July, 2010 Shivani Kaushik [K.KANNAN] JUDGE