Bombay HC: Under which circumstances insurance company is liable to pay and recover compensation granted under motor vehicle claim petition?

To prove the defence that the driver of offending vehicle was not holding effective and valid driving licence at the time of accident, the appellant / Insurance Company has examined Poonam Nikam, Junior Clerk of R.T.O. Malegaon at Exhibit-45. This witness has stated that driver of offending vehicle had applied to the Dy. R.T.O. Malegaon for licence of transport vehicle on 05.09.2018 and on the next date i.e. on 06.09.2018, he was declared pass in the said test by that office, however the licence of transport vehicle was issued to him from 19.10.2018. {Para 5}

 

6. It is contention of learned counsel for the appellant/Insurance Company that the date of accident is 18.10.2018, so on the date of accident the driver was not holding effective and valid driving licence. The driver of offending vehicle examined himself to prove that he was having driving licence. He has further stated that in the year 2017, R.T.O. office Malegaon issued him licence of two wheeler as well as four wheeler. Thereafter, on 05.09.2018 he had applied to the R.T.O. Malegaon for licence of the truck i.e. transport vehicle and he passed that driving test on 06.09.2018. He produced the papers on record. The said papers are at Exhibit-58. While dealing with the issue of driving licence the Tribunal has observed that on the date of accident driver was not holding effective and valid driving licence. There was breach of terms and conditions of insurance policy. On that basis Tribunal has passed pay and recover order. I do not find infirmity in it. In my view, driver had licence of driving the four wheeler vehicle it was issued to him in the year 2017. Thereafter, he applied for licence of driving truck on 05.09.2018 he had passed the said test. The licence is issued on the next day of the accident, as licence of driving four wheeler was issued in the year 2017 hence it cannot be said that he was not aware of the driving skill. Moreover, he had passed driving test of transport vehicle prior to accident. At the time of accident the offending vehicle was insured with the appellant/Insurance Company it is settled principle of law that if there is breach of terms and conditions of insurance policy the Insurance company has to pay the compensation and recover it from the owner of the vehicle. Hence, I do not see merit in the contention that the Insurance Company should have been exonerated from paying compensation.

 IN THE HIGH COURT OF BOMBAY

First Appeal No. 1082 of 2023

Decided On: 18.04.2024

The General Manager, Bajaj Allianz General Insurance Company Ltd. and Ors. Vs. Mahesh Ashok Lande

Hon'ble Judges/Coram:

S.G. Dige, J.

 Citation: 2024:BHC-AS:20013,MANU/MH/2853/2024.

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Delhi HC: Whether claimant is entitled to get compensation for motor accident if he has failed to prove that he had valid driving license at the time of accident?

The doctrine of Res ipsa loquitur, in the instant appeal, initially onus lies on the Claimant that he was permitted to drive the motorcycle to the place of the incident and thereafter he met with an accident on the negligent part of the truck driver. Once the claimant discharges the onus that he was driving the motorcycle on the road with a valid driving license, then only the question of negligence on part of the truck driver arise. In the instant case the deceased neither had a learner's driving license nor was having a valid driving license. At the most the deceased would have been permitted to ride the motorcycle in a closed territory and not on the public road. The claimant has not examined any evidence to prove that he was holding the driving license at the relevant point of time. Therefore, his act of driving motorcycle on the public road in middle of the night was on his own risk. The truck driver merely being a party to the accident per se does not make him liable, particularly when Claimants has not discharged their onus. The Claimant before seeking the relief has to prove that the deceased was holding a valid permit to drive at the time of the incident under Section 2(10) Motor Vehicles Act,1988. {Para 10}.

11. In absence of a valid permit to drive deceased should not have driven motorcycle on public road which automatically infers a definite threat to the general public. In the instant case, time of the accident is 3:15 AM when generally the roads are free from traffic, if a person drives on the public road without valid driving license, the inference drawn could only be of accident and such act would not attract tortuous liability. Reliance is placed on Surender Kumar Arora And Another v. Manoj Bisla And Others (2012) 4 SCC 552.

 IN THE HIGH COURT OF DELHI

Mac. App. 954/2017 and C.M. Appl. 39162/2017

Decided On: 18.01.2019

Rehmani Begum and Ors. Vs. Krishan Pal

Hon'ble Judges/Coram:

I.S. Mehta, J.

Citation: 2019:DHC:371, MANU/DE/5246/2019.

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Supreme Court: Whether MACT can held insurance company liable to pay compensation if vehicle owner failed to prove that driver of vehicle was having valid driving license at the time of accident?

  The question is: whether the fact that the offending vehicle bearing No. DIL-5955 was duly insured by Respondent No. 2 Insurance Company would per se make the Insurance Company liable? This Court in the case of National Insurance Co. Ltd. (supra), has noticed the defences available to the Insurance Company Under Section 149(2)(a)(ii) of the Motor Vehicles Act, 1988. The Insurance Company is entitled to take a defence that the offending vehicle was driven by an unauthorised person or the person driving the vehicle did not have a valid driving licence. The onus would shift on the Insurance Company only after the owner of the offending vehicle pleads and proves the basic facts within his knowledge that the driver of the offending vehicle was authorised by him to drive the vehicle and was having a valid driving licence at the relevant time. In the present case, the Respondent No. 1 owner of the offending vehicle merely raised a vague plea in the Written Statement that the offending vehicle DIL-5955 was being driven by a person having valid driving licence. He did not disclose the name of the driver and his other details. Besides, the Respondent No. 1 did not enter the witness box or examine any witness in support of this plea. The Respondent No. 2 Insurance Company in the Written Statement has plainly refuted that plea and also asserted that the offending vehicle was not driven by an authorised person and having valid driving licence. The Respondent No. 1 owner of the offending vehicle did not produce any evidence except a driving licence of one Joginder Singh, without any specific stand taken in the pleadings or in the evidence that the same Joginder Singh was, in fact, authorised to drive the vehicle in question at the relevant time. Only then would onus shift, requiring the Respondent No. 2 Insurance Company to rebut such evidence and to produce other evidence to substantiate its defence. Merely producing a valid insurance certificate in respect of the offending Truck was not enough for the Respondent No. 1 to make the Insurance Company liable to discharge his liability arising from rash and negligent driving by the driver of his vehicle. The Insurance Company can be fastened with the liability on the basis of a valid insurance policy only after the basic facts are pleaded and established by the owner of the offending vehicle-that the vehicle was not only duly insured but also that it was driven by an authorised person having a valid driving licence. Without disclosing the name of the driver in the Written Statement or producing any evidence to substantiate the fact that the copy of the driving licence produced in support was of a person who, in fact, was authorised to drive the offending vehicle at the relevant time, the owner of the vehicle cannot be said to have extricated himself from his liability. The Insurance Company would become liable only after such foundational facts are pleaded and proved by the owner of the offending vehicle. {Para11}

Driver had no valid licence - Vinod Kumar Lamba Truck owner didn’t produce any evidence establishing . truck was driven by authorized person (para 3 for matter) (Section 149 of Motor Vehicles Act, 1988). The Insurance Company exonerated

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 20962 of 2017 (Arising out of SLP (C) No. 29032 of 2015)

Decided On: 19.01.2018

 Pappu  Vs.  Vinod Kumar Lamba and Ors.

Hon'ble Judges/Coram:

Dipak Misra, C.J.I., A.M. Khanwilkar and Dr. D.Y. Chandrachud, JJ.

Citation:(2018)3 SCC208,AIR 2018 SC 552.

Read full Judgment here: Click here.

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Supreme Court: If the driver of the offending vehicle does not possess a valid driving license, the principle of 'pay and recover' can be ordered

 On the issue of liability to pay the compensation awarded, we affirm the view taken by the High Court that the Respondent - Insurance Company is absolved of the liability to bear the compensation, as evidence has been produced from the office of the Regional Transport Office to prove that the drivers of the two offending trucks were driving on the basis of invalid driving licenses. It is also relevant to note that the owners and drivers of the offending trucks have not appeared at any stage of the proceedings, including this Court. {Para 7}

7.1. This Court in Shamanna and Ors. v. The Divisional Manager, The Oriental Insurance Co. Ltd. & Ors., held that if the driver of the offending vehicle does not possess a valid driving license, the principle of 'pay and recover' can be ordered to direct the insurance company to the pay the victim, and then recover the amount from the owner of the offending vehicle.  MANU/SC/0828/2018 : (2018) 9 SCC 650.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 5123 of 2019.

Decided On: 01.07.2019

Parminder Singh Vs. New India Assurance Co. Ltd. and Ors.

Hon'ble Judges/Coram:

Indu Malhotra and M.R. Shah, JJ.

Author: Indu Malhotra, J.

Citation:  MANU/SC/0860/2019,(2019) 7 SCC 217.

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Whether insurance company can refuse to pay compensation if owner of vehicle has not checked authenticity of driving license of driver of vehicle?

 This Court in National Insurance Co. Ltd. [National Insurance Co. Ltd. v. Swaran Singh MANU/SC/0021/2004 : (2004) 3 SCC 297 : 2004 SCC (Cri) 733] has noticed the defences available to the insurance company Under Section 149(2)(a)(ii) of the Motor Vehicles Act, 1988. The insurance company is entitled to take a defence that the offending vehicle was driven by an unauthorised person or the person driving the vehicle did not have a valid driving licence. The onus would shift on the insurance company only after the owner of the offending vehicle pleads and proves the basic facts within his knowledge that the driver of the offending vehicle was authorised by him to drive the vehicle and was having a valid driving licence at the relevant time.

{Para 12}

17. This issue has been answered in National Insurance Co. Ltd. [National Insurance Co. Ltd. v. Swaran Singh MANU/SC/0021/2004 : (2004) 3 SCC 297 : 2004 SCC (Cri) 733] In that case, it was contended by the insurance company that once the defence taken by the insurer is accepted by the Tribunal, it is bound to discharge the insurer and fix the liability only on the owner and/or the driver of the vehicle. However, this Court held that even if the insurer succeeds in establishing its defence, the Tribunal or the court can direct the insurance company to pay the award amount to the claimant(s) and, in turn, recover the same from the owner of the vehicle. The three-Judge Bench, after analysing the earlier decisions on the point, held that there was no reason to deviate from the said well-settled principle. In para 107, the Court then observed thus: (SCC p. 340)

107. We may, however, hasten to add that the Tribunal and the court must, however, exercise their jurisdiction to issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued, despite arriving at a finding of fact to the effect that the insurer has been able to establish that the insured has committed a breach of contract of insurance as envisaged Under Sub-clause (ii) of Clause (a) of Sub-section (2) of Section 149 of the Act, the insurance company shall be entitled to realise the awarded amount from the owner or driver of the vehicle, as the case may be, in execution of the same award having regard to the provisions of Sections 165 and 168 of the Act. However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it had not been able to do so, the insurance company may initiate a separate action therefor against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given an opportunity to defend at all. Such a course of action may also be resorted to when a fraud or collusion between the victim and the owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage.

10. The owner of the vehicle is expected to verify the driving skills and not run to the licensing authority to verify the genuineness of the driving license before appointing a driver. Therefore, once the owner is satisfied that the driver is competent to drive the vehicle, it is not expected from the owner thereafter to verify the genuineness of the driving license issued to the driver.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 4919 of 2022 

Decided On: 26.07.2022

Rishi Pal Singh Vs. New India Assurance Co. Ltd. and Ors.

Hon'ble Judges/Coram:

Hemant Gupta and Vikram Nath, JJ.

Author: Hemant Gupta, J.

Citation: MANU/SC/1303/2022,2022 SCCONLINE SC 2119.

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Whether the insurance company can pay and recover compensation from the offending vehicle owner if the vehicle driver had no driving license on the date of the incident?

 In Parminder Singh vs. New India Assurance Company Ltd.

& Ors.2019 SAR (Civil) 795, the Hon'ble Apex Court has held as under :

“7. On the issue of liability to pay the

compensation awarded, we affirm the view taken

by the High Court that the Respondent – Insurance

Company is absolved of the liability to bear the

compensation, as evidence has been produced from

the office of the Regional Transport Office to prove

that the drivers of the two offending trucks were

driving on the basis of invalid driving licenses. It is

also relevant to note that the owners and drivers of

the offending trucks have not appeared at any

stage of the proceedings, including this Court.

7.1. This Court in Shamanna & Ors. v. The

Divisional Manager, The Oriental Insurance Co. Ltd.

& Ors., held that if the driver of the offending

vehicle does not possess a valid driving license, the

principle of ‘pay and recover’ can be ordered to

direct the insurance company to the pay the victim,

and then recover the amount from the owner of the

offending vehicle. (2018) 9 SCC 650. {Para 6}

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

FIRST APPEAL NO.172 OF 2019

WITH

INTERIM APPLICATION NO.765 OF 2021

IN

FIRST APPEAL NO.172 OF 2019

 THE NEW INDIA ASSURANCE CO. LTD. V/s.  SMT. MANISHA SANJAY NIKAM 

CORAM : V. G. BISHT, J.

PRONOUNCED ON : 17th FEBRUARY 2022

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Whether a person can be held guilty for contributory negligence if he drives vehicle without driving license?

 If a person drives a vehicle without a licence, he commits an offence. The same, by itself, in our opinion, may not lead to a finding of negligence as regards the accident. It has been held by the courts below that it was the driver of the mini truck who was driving rashly and negligently. It is one thing to say that the Appellant was not possessing any licence but no finding of fact has been arrived at that he was driving the two-wheeler rashly and negligently. If he was not driving rashly and negligently which contributed to the accident, we fail to see as to how, only because he was not having a licence, he would be held to be guilty of contributory negligence...

10. The matter might have been different if by reason of his rash and negligent driving, the accident had taken place.

9. In view of the above position, we are of the view that the deduction of forty per cent which was made on the ground of contributory negligence is without any basis. Accordingly, we direct that the Appellant shall be entitled to an additional amount of Rs. 4.60 lakhs which was wrongly disallowed.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 22966 of 2017 (Arising out of SLP (C) No. 27398 of 2016)

Decided On: 15.12.2017

 Dinesh Kumar J. Vs.  National Insurance Co. Ltd. and Ors.

Hon'ble Judges/Coram:

Dipak Misra, C.J.I., A.M. Khanwilkar and Dr. D.Y. Chandrachud, JJ.

Citation: (2018) 1 SCC 750

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Whether accident claim can be rejected on ground that driving license was not bearing "PSV" endorsement?

A Division Bench of the High Court of Jammu
and Kashmir at Srinagar, of which I (Justice Mansoor
Ahmad Mir, Chief Justice) was a member, in a case titled
as National Insurance Co. Ltd. versus Muhammad Sidiq
Kuchey & ors., being LPA No. 180 of 2002, decided on
27th September, 2007, has discussed this issue and held
that a driver having licence to drive “LMV” requires no
“PSV” endorsement. It is apt to reproduce the relevant
portion of the judgment herein:
“The question now arises as to whether the
driver who possessed driving licence for driving
abovementioned vehicles, could he drive a
passenger vehicle? The answer, I find, in the
judgment passed by this court in case titled
National Insurance Co. Ltd. Vs. Irfan Sidiq Bhat,
2004 (II) SLJ 623, wherein it is held that Light
Motor Vehicle includes transport vehicle and
transport vehicle includes public service vehicle
and public service vehicle includes any motor
vehicle used or deemed to be used for carriage
of passengers. Further held, that the
authorization of having PSV endorsement in
terms of Rule 41 (a) of the Rules is not required
in the given circumstances. It is profitable to
reproduce paras 13 and 17 of the judgment
hereunder:-
“13. A combined reading of the above
provisions leaves no room for doubt that by
virtue of licence, about which there is no
dispute, both Showkat Ahamd and Zahoor
Ahmad were competent in terms of section
3 of the Motor Vehicles Act to drive a public
service vehicle without any PSV
endorsement and express authorization
in terms of rule 4(1)(a) of the State Rules.
In other words, the requirement of the State
Rules stood satisfied.
….........................................

17. In the case of Mohammad Aslam Khan
(CIMA no. 87 of 2002) Peerzada Noor-udDin
appearing as witness on behalf of
Regional Transport Officer did say on recall
for further examination that PSV
endorsement on the licence of Zahoor
Ahmad was fake. In our opinion, the fact
that the PSV endorsement on the licence
was fake is not at all material, for, even if
the claim is considered on the premise that
there was no PSV endorsement on the
licence, for the reasons stated above, it
would not materially affect the claim. By
virtue of “C to E” licence Showkat Ahmad
was competent to drive a passenger
vehicle. In fact, there is no separate
definition of passenger vehicle or
passenger service vehicle in the Motor
Vehicles Act. They come within the ambit
of public service vehicle under section
2(35). A holder of driving licence with
respect to “light Motor Vehicle” is thus
competent to drive any motor vehicle used
or adapted to be used for carriage of
passengers i.e. a public service vehicle.”
In the given circumstances of the case PSV

endorsement was not required at all.”

IN THE HIGH COURT OF HIMACHAL PRADESH
SHIMLA
FAO (MVA) No. 362 of 2011.

 Dated: 12th August, 2016.
Oriental Insurance Co. Ltd.  V Smt. Sartabi and others 
Coram:
 Mr. Justice Mansoor Ahmad Mir, Chief Justice.

Citation: 2017(2) ALL MR (JOURNAL) 30

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When burden of proof is on insurance company to prove that driver was not having valid licence in motor accident claim petition?

 As regards the investigation report of the search conducted by the

said Bharadwaj and Company, no such certificate issued by the R.T.O.

Dehradun is produced on record to show that the driving liecnce on which

the Opponent No.2 has relied upon, was totally false or fake one. Thirdly,

in the claim form it was stated that the licence was issued by the R.T.O.

Nashik. The insurance company has not produced any documents on

record to show that the R.T.O. Nashik has made inquiry and found that no

such liecnce was issued in the name of the Opponent No.2.

13] Needless to state that as the insurance company is coming before

the court with a specific plea that the driver was not having valid licence

and hence, there was breach of insurance policy, the burden obviously

therefore was on insurance company to prove that the driver does not

have valid licence. Appellant company should have discharged that

burden by carrying out necessary investigations and inquiries with R.T.O.

Nashik or Dehradun and not on the basis of some letter issued by private

investigator.

14] In such circumstances, I do not find tthat the Tribunal has

committed any error in holding the insurance company liable along with

the owner for payment of compensation amount to the claimants. The

appeal therefore is devoid of merits.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

FIRST APPEAL NO.99 OF 1999

Oriental Insurance Company Ltd. Vs Smt.Balubai Shivaji Dabhade and Ors. 

 CORAM : DR. SHALINI PHANSALKAR-JOSHI, J.

DATE : 3rd October 2016.

Citation: 2017(2) MHLJ 405

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Whether claimant can be denied compensation under motor accident if driving license of driver was fake?

 In authority National Insurance Company Limited v. Geeta Bhat & Ors. MANU/SC/7390/2008 : 2008 (3) R.C.R. (Civil) page 44, the Hon'ble Apex Court has held that owner of the vehicle despite taking reasonable care might have not been able to find out as to whether the licence was fake one or not. It has been further stated that owner is not expected to verify the genuineness thereof from the Transport authorities. The Hon'ble Apex Court in authority In authority United India Insurance Co. Ltd. v. Lehru and Ors. case (supra), the Hon'ble Apex Court has held as under:--

"20. When an owner is hiring a driver he will therefore have to check whether the driver has a driving licence. If the driver produces a driving licence which on the face of its looks genuine, the owner is not expected to find out whether the licence has in fact been issued by a competent authority or not. The owner would then take the test of the driver. If he finds that the driver is competence to drive the vehicle, he will hire the driver. We find it rather strange that Insurance companies expect owners to make enquires with RTO's, which are spread all over the country, whether the driving licence shown to them is valid or not. Thus where the owner has satisfied himself that the driver has a licence and is driving competently there would be no breach of section 149(2)(a)(ii). The Insurance Company would not then be absolved of liability. If it ultimately turns out that the licence was fake the Insurance Company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive. More importantly even in such a case the Insurance Company would remain liable to the innocent third party, but it may be able to recover from the Insured. Thus is the law which had been laid down in Skandia's, Sohan Lal Passi's and Kamla's case. We are in full agreement with the views expressed therein and see no reason to take a different view."

20. The Tribunal has not gone into this aspect that Insurance Company has failed to prove the fact that there was willful default on the part of the appellant. The expectation from the owner is not that he/she should verify the validity of the licence from licensing Authority. Each case has to be decided on its on peculiar facts and circumstances. In the present case, appellant has employed the driver after taking his driving test and after going through the driving licence. Various renewal endorsements were found to be valid. So, I have no hesitation in holding that the Insurance Company has failed to prove that there was willful default on the part of the appellant and consequently the finding on issue No. 4 stands reversed and it is held that Insurance Company has failed to prove this issue and the same stands decided against the Insurance Company and in favour of the appellant.

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

FAO Nos. 856 of 2013 (O&M) and 1108 of 2013

Decided On: 15.07.2015

 Parveen Chawla and Ors.  Vs. Shakuntla Rani and Ors.

Coram:Karam Chand Puri, J.

 Citation: 2016ACJ535, 2016(1)ALLMR80, 2016(1)RCR(Civil)187

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Whether it is necessary for existing drivers to take training for renewal of driving licence?

From reading of the above observation/direction of the Hon'ble Apex Court, we find the observation/direction contained in paragraph-13(f), no where prescribes imposition of further training to the existing drivers before considering their renewal application as contemplated in both the Circulars. Similarly, observation/direction whatever contained in paragraph-14.9 of the said judgment recommends for refresher training course for heavy vehicle drives to acquaint the drivers with the rules to be followed while using road.

Orissa High Court

Bipin Bihari Sahu vs State Of Odisha And Another on 9 September, 2015

Author: D.H.Waghela

        HIGH COURT OF ORISSA : CUTTACK

        W.P.(C) No.13239 of 2015

Citation;AIR 2016 Orissa 5

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