National Insurance Company Limited v. Raj Kumari wd/o Sukhdev Singh & Ors.

Present: Mr. Ravinder Arora, 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) -.-

The Insurance Co is in appeal against the judgment of the MACT contending that in spite of the fact that the driver who drove the vehicle was proved to have had a fake driving licence, the liability is wrongly cast on it.

In this case, before the Tribunal, the insurance company has produced on record copy of the summons which were issued to summon the concerned clerk from the office of Licensing Authority, Ropar with regard to driving licence No.1250/82-83. On the summons it was reported by the Licensing Authority, Ropar that the driving licence in question had not been issued by the said licensing authority. In defence, learned counsel appearing for the owner and driver of the vehicle argued that assuming that the original driving FAO No.3652 of 1999 -2- licence of the driver was fake then the renewal was perfectly valid. There was no evidence on record that the renewal of the driving licence, in any way, was invalid and as such, the owner of the vehicle could not be held guilty of violation of the insurance company.

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 and 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: “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 FAO No.3652 of 1999 -3- 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.”

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 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.

Even if the insurance company is not liable, the duty to satisfy the award for the claimants cannot be doubted. In such a situation, the liability to satisfy the award will be accompanied with a right of recovery from the owner/insured. This cannot be doubted in anyway, as specifically provided by the decision of the Supreme Court while dealing with the effect of proviso to section 149(4) and section 149(5) of the M.V.Act in New India Assurance co v Kamla (2001) 4 SCC 342.

Under the circumstances, the Insurance Company shall not be liable to indemnify the insured. The liability is to satisfy the FAO No.3652 of 1999 -4- claim under the award with a right of recovery against the insured. The award of the Tribunal is modified and the appeal allowed to the above extent. July 19, 2010 Pankaj* (K. KANNAN) JUDGE