Supreme Court: What is the duty of insured if Insurance company requires him to have the licence duly verified from the licensing authority?

In a claim for compensation, it is certainly open to the insurer Under Section 149(2)(a)(ii) to take a defence that the driver of the vehicle involved in the accident was not duly licensed. Once such a defence is taken, the onus is on the insurer. But even after it is proved that the licence possessed by the driver was a fake one, whether there is liability on the insurer is the moot question. As far as the owner of the vehicle is concerned, when he hires a driver, he has to check whether the driver has a valid driving licence. Thereafter he has to satisfy himself as to the competence of the driver. If satisfied in that regard also, it can be said that the owner had taken reasonable care in employing a person who is qualified and competent to drive the vehicle. The owner cannot be expected to go beyond that, to the extent of verifying the genuineness of the driving licence with the licensing authority before hiring the services of the driver. However, the situation would be different if at the time of insurance of the vehicle or thereafter the insurance company requires the owner of the vehicle to have the licence duly verified from the licensing authority or if the attention of the owner of the vehicle is otherwise invited to the allegation that the licence issued to the driver employed by him is a fake one and yet the owner does not take appropriate action for verification of the matter regarding the genuineness of the licence from the licensing authority. That is what is explained in Swaran Singh's case (supra). If despite such information with the owner that the licence possessed by his driver is fake, no action is taken by the insured for appropriate verification, then the insured will be at fault and, in such circumstances, the insurance company is not liable for the compensation.

 IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 1999-2000 of 2020

Decided On: 04.03.2020

Nirmala Kothari Vs. United India Insurance Co. Ltd.

Hon'ble Judges/Coram:

Navin Sinha and Krishna Murari, JJ.

Author: Krishna Murari, J.

Citation: 2020 INSC 263,MANU/SC/0267/2020,AIR 2020 SC 1193,AIR Online 2020 SC 285.

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Bombay HC: Acceptance Of Insurance Claim Under Protest Not 'Accord And Satisfaction

However, in the present case, there is no admitted claim, and the controversy concerns the application of the principle of accord and satisfaction in light of the claimant's letter dated 16th October 2018 and the discharge voucher signed under protest. I have already recorded reasons that the said letter and the discharge voucher cannot be accepted as a full and final settlement of the claim. Hence, in view of the well-established legal principles as discussed in the above paragraphs, the said letter and the discharge voucher cannot be accepted as accord and satisfaction of the claim. {Para 13}

 IN THE HIGH COURT OF BOMBAY

Commercial Arbitration Petition (L) No. 30675 of 2023

Decided On: 18.03.2026

Oriental Insurance Company Ltd. Vs. Add On Retail Pvt. Ltd.

Hon'ble Judges/Coram:

Gauri Godse, J.

Citation: 2026:BHC-OS:6861,MANU/MH/2641/2026

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Supreme Court: Legal heirs of gratuitous passengers in goods vehicle are not entitled to get compensation from insurance Company

It is therefore, manifest that in spite of the amendment of 1994, the effect of the provision contained in Section 147 with respect to persons other than the owner of the goods or his authorized representative remains the same. Although the owner of the goods or his authorized representative would now be covered by the policy of insurance in respect of a goods vehicle, it was not the intention of the legislature to provide for the liability of the insurer with respect to passengers, especially gratuitous passengers, who were neither contemplated at the time the contract of insurance was entered into, nor any premium was paid to the extent of the benefit of insurance to such category of people. {Para 20}

21. The upshot of the aforementioned discussions is that instead and in place of the insurer the owner of the vehicle shall be liable to satisfy the decree.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 16 of 2004 

Decided On: 06.01.2004

National Insurance Co. Ltd. Vs. Baljit Kaur and Ors.

Hon'ble Judges/Coram:

V.N. Khare, C.J., S.B. Sinha and A.R. Lakshmanan, JJ.

Author: V.N. Khare, C.J.

Citation: AIR 2004 SC 1340,MANU / SC / 0009 / 2004,( 2004 ) 2 SCC 1,[ 2004 ] 1 SCR 274.

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Supreme Court: Insurance company must prove fundamental breach of policy condition if it takes defence of breach of policy conditions

SUMMARY OF FINDINGS :

106. The summary of our findings to the various issues as raised in these petitions are as follows:

(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.

(ii) Insurer is entitled to raise a defence in a claim petition filed under Section 163A or Section 166 of the Motor Vehicles Act, 1988 inter alia in terms of Section 149(2)(a)(ii) of the said Act.

(iii) The breach of policy condition, e.g. disqualification of driver or invalid driving licence of the driver, as contained in Sub-section (2)(a)(ii) of Section 149, have to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time,

(iv) The insurance companies are, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish 'breach' on the part of the owner of the vehicle; the burden of proof where for would be on them.

(v) The court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance of each case.

(vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches on the condition of driving licence is/ are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply "the rule of main purpose" and the concept of "fundamental breach" to allow defences available to the insured under Section 149(2) of the Act.

(vii) The question as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver, (a fake one or otherwise), does not fulfil the requirements of law or not will have to be determined in each case.

(viii) If a vehicle at the time of accident was driven by a person having a learner's licence, the insurance companies would be liable to satisfy the decree.

(ix) The claims tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third party arising in use of motor vehicle. The said power of the tribunal is not restricted to decide the claims inter se between claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defence or defences to the insurer, the Tribunal has necessarily the power and jurisdiction to decide disputes inter se between insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and Se award made thereon is enforceable and executable in the same manner as provided in Section 174 of the Act for enforcement and execution of the award in favour of the claimants.

(x) Where on adjudication of the claim under the Act the tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of Section 149(2) read with Sub-section (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the tribunal Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by Sub-section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the tribunal.

(xi) The provisions contained in Sub-section (4) with proviso thereunder and Sub-section (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover amount paid under the contract of insurance on behalf of the insured can be taken recourse of by the Tribunal and be extended to claims and defences of insurer against insured by, relegating them to the remedy before, regular court in cases where on given facts and circumstances adjudication of their claims inter se might delay the adjudication of the claims of the victims.

 IN THE SUPREME COURT OF INDIA

SLP (C) Nos. 15528 and 15772 of 2002, 

Decided On: 05.01.2004

National Insurance Co. Ltd. Vs. Swaran Singh and Ors.

Hon'ble Judges/Coram:

V.N. Khare, C.J., D.M. Dharmadhikari and S.B. Sinha, JJ.

Authored By : V.N. Khare, D.M. Dharmadhikari, S.B. Sinha

Citations: AIR 2004 SUPREME COURT 1531, 2004 (3) SCC 297, MANU/SC/0021/2004

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AP HC: What action Insurance Company should take if it comes to its knowledge that claimant has put up a false motor accident claim petition in collusion with police?

Admittedly, in this case, the claimants have filed the claim petition on 17.10.2001. The Insurance Company filed counter thereafter. This means, the Insurance Company had knowledge that an allegation is made by the claimant with regard to the involvement of the lorry bearing registration No. ABT 3 in this accident. When the Insurance Company had knowledge that the claimants have alleged involvement of the lorry bearing registration No. ABT 3 in the accident, the Insurance Company should verify the facts. The possibility of falsely involving the vehicle in an accident cannot be ruled out. But as seen from the recitals of the counter, the Insurance Company had not taken any specific stand. At one stage, it doubted the involvement of the offending vehicle in the accident and at another stage, the insurance company had pleaded that the deceased himself had contributed to the accident. Thus, the insurance company had no clear view with regard to the involvement of the offending vehicle in the accident. When the Insurance Company entertains a doubt with regard to the involvement of a vehicle in the accident, it should appoint an investigator to enquire into the allegations as to whether a particular vehicle had plied on the particular route at particular time on a particular day or not. Fact should be verified. If the Insurance Company collects any such evidence to establish that the vehicle was not involved in the accident, then, they must contest the matter and adduce evidence in support of their case. When they come to know that the police investigation is false or that a vehicle is falsely implicated in a case, they must approach the superior police officers and see that necessary action is taken against the erring police officers who have filed a false charge-sheet implicating the vehicle which has no involvement in the accident. They must also challenge the charge-sheet in appropriate proceedings. What happened during the course of investigation and how the police have come to know about the involvement of the vehicle and whether it is due to Finding of the driving licence of the driver of the offending vehicle at the place of accident or due to the version of the eye witnesses, all those aspects cannot be gone into at this stage. The possibility of police coming to know about the involvement of a vehicle or an accused through some unknown source also cannot be ruled out. The police officers do commit certain mistakes and involve innocent persons in criminal cases. Due to over enthusiastic attitude also, they commit mistakes. What is the fact is to be ascertained. It has to be seen whether police investigation resulted in finding the truth or not. If at all the findings of the police are found to be totally incorrect, it is for the insurance company to adduce some evidence to show that the contents of the charge-sheet are false. It is a fact that P.W. 2 deposed that the offending vehicle was not stopped at the place of accident. If that version is correct, there is no possibility of falling of driving licence at the place of accident. Admittedly, the accident occurred during the night time. Even if P.W. 2 had witnessed the accident and noted the offending vehicle number, admittedly he did not get down from the lorry in which he was travelling. It appears that it being night time, he could not have observed the place of accident and he might not have observed each and every object fallen at the place of accident. It is only during the course of preparation of panchanama at the place of accident that the panchas and the police are expected to observe each and every item and note them in their panchanama. The very purpose of conducting panchanama and the scene of offence is to show the location of the dead body, location of offending vehicle, time, marks or falling of any other objects at the place of accident.

{Para 19}

20. During the course of arguments, learned counsel for the respondents/insurance company submitted that the version of P.W. 2 that the offending vehicle was not stopped at the place of accident supports the version of the insurance company that there is no possibility of falling of the driving licence of the driver of the offending vehicle at the place of accident. As discussed above, since there is no clear evidence to show the distance between the offending lorry and the lorry in which P.W. 2 was travelling, the version of P.W. 2 that the offending vehicle did not stop at the place of accident need not be given much importance. Of course, this circumstance indicates that P.W. 2 also did not see the occurring of the accident. Even if we discard the evidence of P.W. 2, charge-sheet shows that there are two other eye-witnesses. Unless it is shown that police investigation is false, we cannot reach to a definite conclusion. When there is reasonable doubt in a claim petition arising out of the motor accidents, the benefit of doubt should go to the claimants. The possibility of the driver of the offending lorry stopping the offending vehicle at the place of the accident and looking at the scene and fleeing away from the place of accident also cannot be ruled out. Unless there is reliable evidence to show that the contents of the charge-sheet are false, on mere surmise, it cannot be said that the contents of the charge-sheet or the police investigation is false.

21. Learned standing counsel for the insurance company submitted that the insurance company has appointed the investigator, but however, the report of the said investigator is not available in the records of the insurance company. When such an important document is not filed by the insurance company, normally, adverse inference has to be drawn against the insurance company. Admittedly, none were examined on behalf of the insurance company. Mere taking a plea that the offending vehicle was not involved in the accident or that there is contributory negligence would not help the insurance company in the absence of any reliable evidence in support of their contentions, A pleading cannot be taken as proved unless there is evidence to prove the same.

 IN THE HIGH COURT OF ANDHRA PRADESH AT HYDERABAD

M.A.C.M.A. No. 2128 of 2005

Decided On: 26.03.2014

K. Rajani Vs. M. Satyanarayana Goud

Hon'ble Judges/Coram:

B. Chandra Kumar, J.

Citation: 2014 ALT 6 3312015 ANWR AP 1 52015 ACC AP 3 2932015 ACJ 7972014 SCC ONLINE AP 418, MANU/AP/0828/2014

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Bombay HC: Under which circumstance the motor accident claim tribunal should not pass the order of pay and recover against Insurance Company?

 In the case at hand, on the date of accident, the driver of the offending vehicle did not hold valid and effective driving license to driving offending vehicle. Opponent No. 2, being driver as well as the owner of the offending vehicle, was fully aware that on the date of accident, he did not hold valid and effective driving license to drive offending vehicle. Even, then, Opponent No. 2 drove offending vehicle and gave dash to the motorcycle of the claimant. These facts on record clearly indicate that the owner of the offending vehicle was guilty of negligence and failed to exercise reasonable care, in the matter of fulfilling the condition of the policy of insurance, regarding use of vehicle by duly licensed driver. Therefore, this breach of condition of policy of insurance being "fundamental breach", the insurer of the offending vehicle, cannot be compelled to indemnify the Opponent No. 2. Therefore, "to pay and recover" order cannot be passed against the insurer of the offending vehicle. I have no hesitation to hold that the learned Tribunal has rightly exonerated the insurer of the offending vehicle from any liability to pay compensation to the claimant. {Para 16}

17. Before parting with the judgment, I must make it clear that the ratio in "Pappu and Others v. Vinod Kumar Lamba and Another"[supra], relied on by the learned counsel for the insurer is distinguishable on facts, for the reason that in the case at hand, Opponent No. 2 has duly pleaded that the offending vehicle was being driven by the driver holding valid and effective driving license. Accordingly, I hold that the insurer has duly proved "fundamental breach" of condition of policy of the insurance of offending vehicle and therefore, no liability can be fastened against the insurer of the offending vehicle. I hold that the Tribunal has rightly fastened entire liability to pay the compensation on Opponent No. 2, who is owner and driver of the offending vehicle. 

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

First Appeal Nos. 567 and 568 of 2019

Decided On: 30.04.2019

Swapnil Vs. The Branch Manager, The New India Insurance Co. Ltd. and Ors.

Hon'ble Judges/Coram:

Sunil K. Kotwal, J.

Citation: MANU/MH/1716/2019.

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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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Under which circumstance Insurance Company can not reject Mediclaim?

 Returning to the facts of the present case, the strict and actual interpretation of Clause 4 reflects that the Insurance Company is permitted to exclude the expenses borne in case the insured person is suffering from any kind of Pre-existing disease(s) until the insured person is continuously covered under the policy for a minimum period of 48 months. What constitutes Pre-existing disease has been provided in the Insurance Policy itself, which reads as follows:-

“Pre-existing condition/disease definition- any condition, ailment, or injury or related condition for which insured person had signs and symptoms and / or were received medical advice/treatment 48 months prior to his/her Super Top Up Medicare policy with the company”

15. The aforesaid definition clause makes it abundantly clear that in order for a disease to be categorized as pre-existing disease, the Insured must have received medical advice/treatment 48 months prior to purchasing the policy for that particular disease. Whereas, the facts are crystal clear that the prior disease on which the Insurance Company has relied to repudiate the claim of the Insured, was last treated in the year 2004 i.e. 5 years before the Policy No. 2 was purchased. Hence, it cannot be said that the case of the Insured fulfils the essentials of the Pre-Existing disease provided in the Insurance policy.

IN THE DELHI STATE CONSUMER DISPUTES REDRESSAL COMMISSION

FIRST APPEAL NO. 161/2016

IN THE MATTER OF

UNITED INDIA INSURANCE COMPANY LTD. Vs

MANMOHAN SINGH 

CORAM:

HON’BLE DR. JUSTICE SANGITA DHINGRA SEHGAL (PRESIDENT)

HON’BLE SH. ANIL SRIVASTAVA, (MEMBER)

PER: HON’BLE DR. JUSTICE SANGITA DHINGRA SEHGAL,

PRESIDENT

JUDGMENT PRONOUNCED ON: 02.08.2021

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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: What order the Motor accident claim tribunal should pass if it directs insurance company to pay and recover from owner of offending vehicle?

 The residual question is what would be the appropriate direction. Considering the beneficial object of the Act, it would be proper for the insurer to satisfy the award, though in law it has no liability. In some cases the insurer has been given the option and liberty to recover the amount from the insured. For the purpose of recovering the amount paid from the owner, the insurer shall not be required to file a suit. It may initiate a proceeding before the concerned Executive Court as if the dispute between the insurer and the owner was the subject matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. Before release of the amount to the claimants, owner of the offending vehicle shall furnish security for the entire amount which the insurer will pay to the claimants. The offending vehicle shall be attached, as a part of the security. If necessity arises the Executive Court shall take assistance of the concerned Regional Transport Authority. The Executing Court shall pass appropriate orders in accordance with law as to the manner in which the owner of the vehicle shall make payment to the insurer. In case there is any default it shall be open to the Executing Court to direct realization by disposal of the securities to be furnished or from any other property or properties of the owner of the vehicle i.e. the insured.  {Para 13}

 IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 6178 of 2004.

Decided On: 21.09.2004

National Insurance Co. Ltd. Vs. Challa Bharathamma and Ors.

Hon'ble Judges/Coram:

Dr. Arijit Pasayat and C.K. Thakker, JJ.

Author: Arijit Pasayat, J.

Citation: (2004) 8 SCC 517,MANU/SC/0779/2004.

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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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Supreme Court: The owner cannot be expected to verify the genuineness of the driving licence with the licensing authority before hiring the services of the driver, unless required by Insurance

In a claim for compensation, it is certainly open to the insurer under Section 149(2)(a)(ii) to take a defence that the driver of the vehicle involved in the accident was not duly licensed. Once such a defence is taken, the onus is on the insurer. But even after it is proved that the licence possessed by the driver was a fake one, whether there is liability on the insurer is the moot question. As far as the owner of the vehicle is concerned, when he hires a driver, he has to check whether the driver has a valid driving licence. Thereafter he has to satisfy himself as to the competence of the driver. If satisfied in that regard also, it can be said that the owner had taken reasonable care in employing a person who is qualified and competent to drive the vehicle. The owner cannot be expected to go beyond that, to the extent of verifying the genuineness of the driving licence with the licensing authority before hiring the services of the driver. However, the situation would be different if at the time of insurance of the vehicle or thereafter the insurance company requires the owner of the vehicle to have the licence duly verified from the licensing authority or if the attention of the owner of the vehicle is otherwise invited to the allegation that the licence issued to the driver employed by him is a fake one and yet the owner does not take appropriate action for verification of the matter regarding the genuineness of the licence from the licensing authority. That is what is explained in Swaran Singh's case (supra). If despite such information with the owner that the licence possessed by his driver is fake, no action is taken by the insured for appropriate verification, then the insured will be at fault and, in such circumstances, the insurance company is not liable for the compensation. {Para 8}

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 8276 of 2009

Decided On: 26.08.2013

Pepsu Road Transport Corporation Vs. National Insurance Company

Hon'ble Judges/Coram:

Gyan Sudha Misra and Kurian Joseph, JJ.

Author: Kurian Joseph, J.

Citation: (2013) 10 SCC 217, MANU/SC/0877/2013.

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Bombay HC: Parents Living Separately Or At Native Place Entitled To Compensation under Motor vehicles Act Upon child's Accidental Death

In the instance case the Claimant’s are Hindus. Under

the Hindu Succession Act the Class I heirs inherits the entire

property of the deceased to the exclusion of all others. Father of

the deceased son is not a Class-I heir under the Hindu

Succession Act. The father of the deceased is a Class II heir.

However, the father who is Class II heir of the deceased is still

entitled to claim compensation under the MV. Act on account his

dependency on his son. It is required to be noted that as a

general principle, the extent of dependency of the unemployed

widow would be highest on account of her age. The dependency

of minor children would be lesser than the widow but more than

parents. The parents of the deceased on account of their old age

would have lesser dependency as compare to the widow and the

children. Any other dependent can also filed a Claim and the

dependency of the Claimant would be a matter of fact to be

determined by the Tribunal. {Para 13}

14. In the instance case the impugned judgment indicates

that there is no issue raised as regard the dependency of the

parents on the deceased. In the ordinary circumstances in the Indian Social system, parents are dependent on their child to take care of them in their old age, irrespective of the fact that they would be staying in the villages/native place away from the son. The parents of the deceased/son are also entitled for filial consortium for loss of love, affection, care and companionship of the deceased child.

15. The arguments of the Insurance Company that the claim cannot be filed by the parents of the deceased as they were staying separate from the deceased in a native village as such were not dependent on the deceased cannot be accepted and the same is rejected.  

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

FIRST APPEAL NO.571 OF 2023

Bajaj Allianz General Insurance Co. Ltd. Vs  Smt.Sunita Virendra @ Birendra Sahani

CORAM : ARUN R. PEDNEKER, J.

DATE : 30th JULY 2024

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What action Insurance Company can take if its agent has issued fake insurance policy?

The Learned Tribunal after considering the evidence on

record has reasoned in its impugned Judgments as follows;

MAC App. Nos.07, 08 and 09 of 2020 10

“27. Shri Bikash Roy Pradhan, the Branch

Manager of the Opposite Party No. 3 clearly admitted

that Shri Rajen Tamang is the authorized agent of

Opposite Party No.3. Exhibit-10 is the certified copy of

the Insurance Policy of the vehicle. In Exhibit-10, in

place of the details of the agent/Broker, the name

of Shri Rajen Tamang with his agent code number as

„BA000015623‟ has been clearly mentioned. Exhibit-

10 was served upon the Opposite Party No.3. The

Opposite Party No. 3 failed to produce and examine

Shri Rajen Tamang, Authorized Agent of Oriental

Insurance Company Limited (Opposite Party No. 3)

despite several opportunities having been given to it.

By perusal of Exhibit -10, it is difficult to identify the

fake and the genuine policy. There is no evidence

produced by the Opposite Party No.3 that the

Opposite Party No.1 owner of the vehicle had

involved himself or influenced the said Shri Rajen

Tamang to illegally issued the fake insurance policy to

him. The Opposite Party No. 3 has not exhibited any

complaint/document against the Opposite Parties No.

1, 4 or Shri Rajen Tamang, authorized agent of

Opposite Party No. 3 stating that the Opposite Parties

No.1 and 4 had obtained a fake insurance policy of

the Oriental Insurance Company Limited or Shri Rajen

Tamang handed over the fake insurance policy to the

Opposite Parties Nos.1 and 4 and the same was in

their personal knowledge. There is no evidence to the

effect that the Opposite Parties No.1 and 4 had

obtained fake insurance policy in collusion with the

staff or agent of Opposite Party No.3. From evidence

on record, no apparent role appears to have been

played by the owner in obtaining the fake insurance

policy. It is very difficult to pin point who is

responsible for issuance of the fake insurance policy.

It is unbelievable that an insured would obtain a fake

certificate by paying the same premium at his own

risk and peril. The Opposite Party No.4 Shri Biren

Gurung further establishes that in order to obtain

Exhibit-10, Opposite Party No.1 had given him ₹

14,500/. He personally knows Rajen Tamang as he

is the agent of the Opposite Party No.3. Opposite

Party No.4 paid a sum of ₹ 14,500/- to Rajen

Tamang, agent of the Opposite Party No. 3 through

one Palden Bhutia and Rajen Tamang handed over

Exhibit-10 to Opposite Party No.4. Opposite Party No.

4 further establishes that as per the direction of

Rajen Tamang, he handed over premium amount to

Shri Palden Bhutia. On the facts and circumstances of

the case at hand, it cannot be held that Opposite

Party No.1 (Owner of the vehicle) has any role to

play in issuance of the fake policy, on the other hand

evidence on the record cast suspicion towards the

authorized agent of the insurance company. Since,

Opposite Party No. 3 has admitted that Shri Rajen

Tamang is its authorized agent, there is master and

servant relation between the Opposite Party No.

3 and the said Shri Rajen Tamang. From this angle

MAC App. Nos.07, 08 and 09 of 2020 11

also Opposite Party No. 3 is liable for the act of the

said Rajen Tamang. However, the Opposite Party No.

3 is as liberty to conduct an inquiry against its agent

Rajen Tamang in respect of issuance of Exhibit 10 to

find out the actual fact as narrated supra and if found

guilty, it can recover the amount paid to the Claimant

by way of the Award in the instant claim petition from

the said Rajen Tamang.” [emphasis supplied]

13. The observations of the Learned Tribunal in arriving at

its conclusions is perfectly reasoned and brooks no interference.

{Para 12}

 THE HIGH COURT OF SIKKIM : GANGTOK

(Civil Appellate Jurisdiction)

MAC App. No.07 of 2020

The Branch Manager, Oriental Insurance Company Limited Vs

 Padam Bahadur Rai and Others

Coram: Meenakshi Madan Rai, J.

DATED : 2nd December, 2022.

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Whether insurance Company can refuse to pay compensation to third party if certificate of Insurance was wrongly issued?

If a question of fraud or misrepresentation arises by and between the insurer and the insured, the third party claimant is not concerned therewith. A vehicle is required to be compulsorily insured in terms of the provisions of the Motor Vehicles Act, 1988. Keeping in view the aforementioned provisions, we are of the opinion that the learned tribunal has committed an error in going into the issue raised by the respondent No. 1. In our opinion, if according to the respondent No. 1, the contract of insurance did not come into force on 18-2-1992 and the certificate of insurance was wrongly granted either by reason of any mistake or fraud committed by either of the parties or by its officers, the remedy of the respondent No. 1 may be to initiate a separate proceeding for realisation of the amount so paid by it from the owner of the vehicle, but keeping in view the letter and spirit of the Motor Vehicles Act, we are of the opinion that a third party claimant should not suffer therefore.

 IN THE HIGH COURT OF CALCUTTA

Misc. Appeal No. 7 of 1995

Decided On: 31.07.1996

V. Ravi Vs. New India Assurance Company Ltd. and Ors.

Hon'ble Judges/Coram:

S.B. Sinha and S.K. Tiwari, JJ.

Author: S.B. Sinha, J.

Citation: MANU/WB/0032/1997, 1998ACJ598, AIR1997CAL242.

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Whether in claim petition, the Insurance company can take the defence that they are not liable to pay compensation as their agent has committed the fraud?

When admittedly Ganesan is the Agent of the Insurance Company and received the premium from Gurusamy and in fact that Gurusamy was also given a policy, we are shocked and surprised to see, how the Insurance Company can disown its liability, more so when it does not suspect the bona fides on the part of Gurusamy. It is not the case of the Insurance Company that as per rules/conditions of the Policy, whenever a client receives a Policy from the agent, he has to go over to the office and contact the -manager or any named officer to show the policy which he has received to ascertain its genuineness.{Para 9}

10. Let us turn to analyse the legal position. The word 'agent' is derived from the Latin word "agere" which means 'to do'. Thus, an agent is a person, who acts for another whether by express or implied consent. The general rule is that whatever a person may do himself, he may authorize another to do for him in accordance with the maxim "qui facit per alium facit per se " meaning he who does anything by another, does it by himself.

In Krishna v. Ganapathi, MANU/TN/0264/1955 : AIR1955Mad648 , a Division Bench of this Court explained the concept of agency in the following terms:

"An agent is thus a person either actually or by law held to be authorized and employed by any person to bring him into contractual or other legal relations with a third party. He is a representative vested with authority, real or ostensible to create voluntary primary obligations for his principal by making promises or representations to third person calculated to induce them to change their legal relations. Representative character and derivative authority may briefly be said to be the distinguishing feature of an agent."

(a) What House of Lords ruled way back on 19th July, 1912 in Lloyd v. Grace, Smith & Co. 1912 AC 716 would be relevant.  In that case, Lord Macnaghten expressed his view in the following terms,

"The only difference in my opinion between the case where the principal receives the benefit of the fraud, and the case where he does not, is that in the latter case the principal is liable for the wrong done to the person defrauded by his agent acting within the scope of his agency; in the former case he is liable on that ground and also on the ground that by taking the benefit he has adopted the act of his agent; he cannot approbate and reprobate."

Lord Shaw of Dunfermline agreed with Lord Macnaghten and further added the following,

"The case is in one respect the not infrequent one of a situation in which each of two parties has been betrayed or injured by the fraudulent, conduct of a third. I look upon it as a familiar doctrine as well as a safe general rule, and one making for security instead of uncertainty and insecurity in mercantile dealings, that the loss occasioned by the fault of a third person in such circumstances ought to fall upon the one of the two parties who clothed that third person as agent with the authority by which he was enabled to commit the fraud.

... I am aware of the approval given to this language in subsequent cases, as for instance in Ruben v. Great Fingall Consolidated, 1906 AC 439, by Lord Davey, and in British Mutual Banking Co. v. Charnwood Forest Rv. Co., 18 O.B.D. 714, by Lord Bowen. If I may respectfully do so, I tender my entire concurrence in the opinion Just delivered by my noble and learned friend Lord Macnaghten upon the dicta of Lords Davey and Bowen in these cases. But I do so subject to this - that I cannot bring myself to think that it was ever distinctly meant to be announced or suggested as law that, on the assumption that a person deals with an agent in good faith, and that the conduct of the agent is fully within the scope of his authority, then the principal of that agent is not responsible for the agent's fraud, by reason of the fact that the agent did not mean to 'benefit his principal by the fraud, but to benefit himself. That, in my opinion, is not the law. On the contrary, the principal is, in such circumstances, legally responsible for his agent's conduct."

The principal is liable for the fraud of his agent acting within the scope of his authority, whether the fraud is committed for the benefit of the principal or for the benefit of the agent.

 IN THE HIGH COURT OF MADRAS

C.M.A. No. 55 of 1997

Decided On: 27.10.2003

The National Insurance Company Limited Vs. M. Nandan and Ors.

Hon'ble Judges/Coram:

A.S. Venkatachala Moorthy and S.R. Singaravelu, JJ.

Citations: II(2004)ACC645, 2004ACJ1449, 2004(2)CTC522, (2004)1MLJ146, MANU/TN/1923/2003.

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Under which circumstances it can be said that Insurance Company has failed to prove that insurance policy produced by claimant in motor accident claim petition is fake?

 It is evident from the facts and undisputed that the accident occurred on 09.06.2012, as a result of which Jepu Khan succumbed to injuries whereas, for insurance of the vehicle in question. However, the case set up by the appellant company is that the insurance policy (Ex. 11) produced by the owner is fake and correct copy of insurance policy was tendered in evidence on behalf of appellant company as Ex. A/1 being Policy No. 2313200275427800000 according to which the vehicle was insured for the period 12.06.2012 to 11.06.2013 whereas, the accident took place on 09.06.2012. Thus, the burden of proving the fact that the insurance policy produced by the owner is forged and fabricated and the vehicle in question was in fact insured for the period 12.06.2012 to 11.06.2013 was upon the appellant insurance company. The appellant insurance company in support of contention produced NAW/1 Pankaj Sharma in evidence who stated that the policy produced by the owner is forged and in this regard a complaint was lodged before the Superintendent of Police, Jaisalmer. However, the said witness has categorically stated that complaint in this regard was not filed for four years from 15.09.2012 to 12.04.2016. Further the said witness has also denied having any knowledge with regard to the agent who issued the said policy. The said witness has also denied having any knowledge with regard to the fact whether the amount against the premium was received in cheque or cash and also failed to produce any record with regard to the receipt of premium by the company. {Para 11}

12. It is pertinent to note that in the matter in hand, the insurance company has admitted coverage of vehicle through insurance policy Ex. A/1 but denied the period of coverage with regard to which claim petition was filed under insurance policy Ex. A/11 filed by the owner/claimant.

13. The accident was caused on 09.06.2012 and the claim petition was pending before the Tribunal from year 2012 but the insurance company did not initiate any proceedings against the owner for producing forged and fabricated policy and it is only in the year 2016 that a complaint was sent to the Superintendent of Police, Jaisaler. The appellant insurance company could have produced the record containing the receipt of premium, proposal form, name of agent and code etc to prove that the policy produced by the company as Exhibit A/1 is the genuine one and was issued for the period 12.06.2012 to 11.06.2013. However, as rightly noticed by the learned Judge, MACT Cases, the appellant insurance company has failed to prove the same.

14. As far as the case of Sobina Iakai (Supra) relied upon by the learned counsel for the appellant insurance company, the same relates to the date and time from which the policy would be effective. Hon'ble Supreme Court in the said case has held that when the specific time and date is mentioned, then the insurance policy becomes effective from that point of time and not from an earlier point of time. Herein this case, the respondent had produced the policy issued by the appellant insurance company which was very much effective on the date of accident and the appellant insurance company has failed to prove that the said insurance policy was forged or fabricated and therefore, the case relied upon by the counsel for the appellant is not applicable in the facts and circumstances of the present case.

 IN THE HIGH COURT OF RAJASTHAN AT JODHPUR

S.B. Civil Misc. Appeal No. 2623/2016

Decided On: 03.02.2017

HDFC ERGO General Insurance Company Ltd. Vs. Nimaji and Ors.

Hon'ble Judges/Coram:

Goverdhan Bardhar, J.

Citation: MANU/RH/0086/2017,2017 ACJ 2830 Raj

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Whether Motor accident claim tribunal can rely on certified copy of F.I.R. and spot panchnama if insurance company has not contested the claim on the issue of negligence?

 The documents in question, i.e., certified copy of F.I.R. and spot panchnama were produced by the original claimants along with the claim petition. In para 28 of the claim petition, reference is made to the fact that claimants were relying upon the documents which were produced along with application. In the written statement which is filed by the appellants, there is no dispute raised as regards the documents which are produced along with the application. It appears from the record that the claim application was not defended by the insured and the same was contested by the appellant as per order below in application at Exh. 34 passed under the provisions of Section 170 of the Motor Vehicles Act, 1988. By the said order permission was granted in favour of the appellant to take all defences and to contest the claim on merits. On 24.7.2002, the said application was allowed. After the said application was allowed, additional written statement or further written statement was not filed by the appellant. The evidence was recorded by the Claims Tribunal and on 5.8.2002, the evidence close pursis was filed by the advocate for the appellant. On the next date, i.e., 12.8.2002 written submissions were filed on behalf of appellant and on 21.8.2002 the learned Member of the Claims Tribunal heard the oral submissions made by the advocate for the claimants and the matter was closed for judgment. Thus, no oral submissions were made on behalf of the appellant. I have perused the written submissions of appellant at Exh.  A1. The written submissions are filed raising only dispute as regards quantum of compensation payable to the claimants. Not a single submission is made on behalf of the appellant on the issue of negligence. In the written submissions, it is stated that considering the evidence on record, total income of the deceased will be Rs. 22,000 per annum and after deducting 1/3rd from his income and applying multiplier of 15 years, compensation payable will be Rs. 2,19,000 plus Rs. 10,000 for conventional amount and Rs. 5,000 for funeral. It is very clear that appellant insurance company did not contest claim as far as issue of negligence is concerned. Only contest was on the quantum of amount payable to the claimants. Therefore, a specific case is made out that the respondent Nos. 1 to 4 are entitled to compensation of only Rs. 2,19,000. Though opportunity was granted to the insurance company to defend the claim on behalf of insured both on the issue of negligence and quantum, the said opportunity was not availed of and the contest by the insurance company was restricted only to the quantum of amount of compensation. There were clear averments made in the application as regards negligence by the driver of the jeep. The driver and owner of the jeep though served did not file the written statement. Appellant insurance company even after leave was granted did not contest the case on the issue of negligence. It is obvious that as there was no contest by the appellant on the issue of negligence, the claimants did not examine any eyewitness and did not examine any witness to prove the certified copy of the spot panchnama or F.I.R. {Para 6}

7. In this view of the matter, the contention raised by the appellants that the panchnama and F.I.R. was not admissible in the evidence for want of proof cannot be considered.

 IN THE HIGH COURT OF BOMBAY

F.A. No. 524 of 2003

Decided On: 11.08.2004

Oriental Insurance Co. Ltd. Vs. Sangita Dattatraya Jamdade and Ors.

Hon'ble Judges/Coram:

Abhay Shreeniwas Oka, J.

Citation:  MANU/MH/1406/2004,2006 ACJ 971 Bom.

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Whether insurance company can avoid their liability saying that as verification of vehicle is not done, policy has not come in force?

 In the context of the said factual and legal situation, it is to be held that in contract of insurance in respect of motor vehicles, the issuance of policy becomes effective when premium is received. The insurer cannot postpone the assumption of liability after receipt of premium. The necessary verification of vehicle and the documents should be done before receipt of premium. However, under the said pretext the insurer cannot postpone the assumption of risk, other than from the date and time of receipt of premium.

 IN THE HIGH COURT OF KARNATAKA AT BANGALORE

M.F.A. No. 11677 of 2005 (MV)

Decided On: 30.09.2010

Zameer Ahamed Vs. B.R. Narayana Shetty and Ors.

Hon'ble Judges/Coram:

N.K. Patil and H.S. Kempanna, J.

Author: N.K. Patil, J.

Citation:  MANU/KA/1774/2010,2012 ACJ 1322(Karnataka).

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Whether in claim petition insurance company can be permitted to pay interest from the date it was impleaded as party if it was impleaded at later stage?

Claim petition, in the instant case, was filed and the insurer was arrayed as party at later stage for the simple reason that it was not known to the claimant as to who was the insurer of the offending vehicle. The name of the insurer was disclosed by the insured during the pendency of the claim application and only thereafter the insurer was arrayed as party respondent in the claim petition. Thus, how it can be said that the claimant is not entitled for interest or interest is to be recovered from the owner prior to arraying of the insurer as a party respondent. {Para 6}

7. The purpose of mandate of the Insurance Act, read with the mandate of sections 146 to 149 of the Act, is that the owner is under legal obligation to get the vehicle insured and the purpose of insurance is that third parties, as also the damage caused to the vehicle by the driver, are protected. Thus, by no stretch of imagination, it can be said that the liability of the insurer to pay interest starts from the date of its impleadment as party in the claim petition.

8. It is also well established that a person who is impleaded as party to a lis in terms of Order 1, rule 10 of the Code of Civil Procedure (for short, the CPC), he becomes party to the lis right from the date of institution of the lis, and thus, it cannot be claimed that the petition is barred by time and he should be saddled with the liability from the date of impleadment. If that ground was available to the insurer, it should have questioned the impleadment order, which it has not. The insurer has accepted the order of impleadment and has not made any murmur.

12. Thus, from the bare perusal of the above provision, it is clear that section 171 of the Act mandates that the claimant is entitled to interest from the date of filing of the claim petition or from the date of the judgment and not earlier to that. Section 171 of the Act nowhere provides that in case a party is arrayed in the claim petition at a subsequent date, that party has to be saddled with the interest from the date of impleadment and not prior to that. Having said so, no case is made out for interference. Accordingly, the impugned award is upheld and the appeal is dismissed.

 IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA

F.A.O. No. 215 of 2008

Decided On: 07.08.2015

United India Insurance Co. Ltd. Vs. Manohar Lal and Ors.

Hon'ble Judges/Coram:

Mansoor Ahmad Mir, C.J.

Citation: 2016 ACJ 1612 (HP), MANU/HP/1387/2015.

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