New India Assurance Co. Ltd., Regional Office, SCO No.36-37, Sector v. Bachhan Singh & Ors.

Smt. Beena Devi and others

6. F.A.O. No.1554 of 2001 ........Appellant ...Respondents New India Assurance Co. Ltd., Regional Office, SCO No.36-37, Sector 17-A, Chandigarh through its duly constituted Attorney. Versus Bahadur Singh and others

7. F.A.O. No.1555 of 2001 ........Appellant ...Respondents New India Assurance Co. Ltd., Regional Office, SCO No.36-37, Sector 17-A, Chandigarh through its duly constituted Attorney. ........Appellant ...Respondents Versus Smt. Savitri and others Present: Mr. R.C. Gupta, Advocate for Mr. Pardeep Bedi, 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? -.- F.A.O. No.1548 of 2001 -3- K. KANNAN J.(ORAL)

1. This batch of seven cases address the issue of liability of the insurance company on the ground that the licence produced on behalf of the owner and driver was a fake one and evidence had been tendered with reference to the copy of the licence produced by the owner, by examining the officers from the Transport Authority. The Tribunal held that the registers maintained by the Transport Authority did not evoke confidence and therefore, rejected the defence and cast the liability on the insurance company.

2. Learned counsel appearing on behalf of the insurance company urges that in claims by third parties, the insurance company is entitled to show that there was no valid insurance under Section 149. Having regard to the fact that the driver and the owner did not originally let in any evidence except production of a copy of driving licence, attempt was made by the insurance company to secure the presence of the licencing authority, Mathura which was said to have issued the licence bearing No.5058/MTR/96. The insurance company had examined RW-3, Senior Assistant RTA, Mathura, who gave evidence to the effect that the licence had been issued in favour of one Ruchi Bhatia and that the licence had not been issued in favour of driver Mohammed Abbas either in the year 1996 or 1997. The report of the licencing authority R3 had also been produced. After this evidence was given, the owner and the driver were produced Ex.R2 but no evidence was again let in. It purports to have been issued by RTO Gurgaon. The insurance company has, therefore, summoned the relevant records from the licencing F.A.O. No.1548 of 2001 -4- authority, Gurgaon as well. The insurance company has examined RW-2, Ved Parkash, Licence Clerk, RTA Office Gurgaon. He has spoken about the fact that they had renewed the licence vide renewal No.1266/G/RTA/2000 which was valid upto 2003.

3. The issue in this case is not that the renewal itself was fake. On the other hand, it is the original licence which is said to have been issued in favour of the driver from Mathura was a fake one and therefore, the renewal was also not valid. The Tribunal rejected the contention on behalf of the insurance company by stating that the registers produced by the company from the Regional Transport Authoirty did not evoke confidence. The Tribunal referred to the very same register, which was produced, that showed that yet another licence No.4887/MTR/96 had been issued in favour of two persons namely Manvinder Singh and Anil and the witness had also admitted that the two names were found against the same licence number. It is one thing to doubt the entry found as not reliable by making a comparison with yet another entry relating to some other person but quite another to reason that every entry found in the register is doubtful. In this case, there were two entries, one relating to the name of the driver Ruchi Bhatia and yet another in the name of Manvinder. As the document produced revealed that the particular licence number claimed to be of the driver of the offending vehicle was issued in the name of Ruchi Bhatia and not found to contain the name of the driver at all, then it was for the owner or the driver to explain how the discrepancy happened. It was perhaps possible for even the owner to explain F.A.O. No.1548 of 2001 -5- that he had merely acted on the driving licence produced by the driver and therefore, he had no knowledge of the fact that there was anything to doubt the genuineness of the licence. For such a contention to be made the owner ought ot have examined himself and tendered evidence about the circumstances that made him believe that the driving licence held by the driver was assumed to be true. With no evidence coming from the driver or the owner, the decision taken by the Tribunal discrediting the evidence given through the officials of the RTA does not apear to be correct. In several of the decisions, which have come before the Hon'ble Supreme Court, where the issue of fake driving licence had been dealt with, the Hon'ble Supreme Court has always held that it is essentially a question of fact which has to be properly considered in the manner sought to be explained. In United India Insurance Company Limited Vs. Davinder Singh (2007) 8 SCC 698, the Hon'ble Supreme Court held that renewal of originally forged or fake licence will amount to not having a valid licence at all and held that there could be need to indemnify the damage caused to the owner of the vehicle. The Hon'ble Supreme Court held that once the licence is found to be fake, the renewal could not take away the effect of a fake licence. In National Insurance Company Limited Vs. Swaran Singh (2004) 3 SCC 279, the Hon'ble Supreme Court dealt with the expression "duly licenced" occurring under Section 149A (2) (i). The Hon'ble Supreme Court held that driving of a vehicle without a licence is an offence and if a person does not hold an effective licence on the date of the accident, he may be liable to F.A.O. No.1548 of 2001 -6- prosecution in terms of Section 148 of the Act but Section 149 pertains to insurance against third party risk. The Hon'ble Supreme Court, therefore, held that the provision of a statute, which is penal in nature vis-a-vis a provision and yet another provision is beneficient to the third party, they must be interpreted differently. The Hon'ble Court, therefore, held that words "effective licence" used under Section 3 could not be imported to Section 149(2) of the Act. Referring to fake licence, the Hon'ble Supreme Court held that fake or a forged licnece is as good as no licence but the requirement to establish the defence is that the insurer must prove that the owner was guilty of willful breach of the conditions of the insurance policy or the conract of insurance. The defence to the effect that the licence held by a driver was a fake one could be available to insurance company but whether despite the same, the plea of default on the part of the owner had been established or not, whether the insured did not take reasonable and adequate care and caution to verify the genuineness or otherwise of the licence held by the driver would be a question, which would have to be determined in each case. This precisely is the point for adjudication in this case. When renewed copy of the licence had been produced before the Court and when the insurer had taken steps to produce the evidence of the Regional Transport Authorities to show that there was no original licence issued in favour of the particular driver, it was literally discharging an onus cast upon the insurer and throwing it upon the owner and the driver to prove that the licence was not fake. In any event, there arose a duty upon the owner to explain F.A.O. No.1548 of 2001 -7- that he was not aware of such a fake character of the licence. This is an issue which the Hon'ble Supreme Court in National Insurance Company Limited Vs. Swaran Singh's case (supra) would refer to as a point which has to be decided in each and every case. In this case, the failure of the owner to take the definite stand to explain the documents, who had been tendered before the Court or at any rate to explain the circumstances under which he had believed that the driver had a valid driving licence was not explained at all by the owner. The liability cast on the insurer was under the cirucmstances excluded.

4. At the stage when the appeal was filed, the awards of the Tribunal had been stayed only with reference to the interest component of which the Tribunal had awarded 12% when the Insurance Company was claiming that it could not have been more than 9%. The Insurance Company appears to have discharged the liability in terms of the award except for interest. The Insurance Company shall now take the benefit of recovery of the amount paid to the claimants from the insured and it shall not avail to them to recover the sums paid to the third party claimants. The right to pay and recover shall be enforced in execution in the respective motor accident claim petitions themselves and will not insist the insurance company to resort to any independent action. The interest, which is awarded at 12% stands reduced to 9% as held in Khaushama Begam Vs. New India Assurance Company 2001(1) SCC 155.

5. The awards of the Tribunal in all the cases stand modified to the extent of providing for the insurance company a right to F.A.O. No.1548 of 2001 -8- recover the amounts against the insured only. The appeals are allowed to the above extent. There shall be, however, no direction as to costs. June 28, 2010 Pankaj* (K. KANNAN) JUDGE