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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 20962 OF 2017

(Arising out of SLP(C) No.29032 of 2015)

PAPPU AND ORS. …..APPELLANT(S)

:Versus:

VINOD KUMAR LAMBA AND ANR. …..RESPONDENT(S)

J U D G M E N T

A.M. Khanwilkar, J.

1.This appeal questions the legality and tenability of the

judgment of the High Court of Judicature at Allahabad in First

Appeal from Order No.1138 of 2000, dated 9

th

October, 2014,

whereby the appeal filed by the appellants was dismissed by

the High Court whilst rejecting the only question raised before

it regarding absolving the Insurance Company (Respondent

No.2) from any liability in respect of truck bearing

No.DIL-5955, which was duly insured by respondent No.2

Insurance Company, on the ground that the same was not

driven by a person having a valid licence, as found by the

Motor Accident Claims Tribunal, District Allahabad in Claim

Petition No.215 of 1999.

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2.In the claim petition it was asserted that on 12.08.1995

Om Prakash, son of Satku Lal, was driving Truck

No.URS-2735 when it was knocked down by a rashly and

negligently driven Truck No.DIL-5955 coming from the

opposite direction, as a result of which Om Prakash

succumbed to fatal injuries. The claim petition was filed by the

widow of deceased Om Prakash. Om Prakash left behind his

children Pappu, aged 16 years, Ramu, 12 years, Kumari

Geeta, 14 years, Kumari Neetu, 10 years, Kumari Guriya, 8

years and his mother, Smt. Shiv Rani, at the time of the

accident. The widow of deceased Om Prakash claimed

compensation of Rs.7 lakh under Fault Liability and

Rs.25,000/- under No Fault Liability. The mother of Om

Prakash claimed compensation of Rs.50,000/- separately. On

the date of the accident, Om Prakash was around 35 years of

age and was a driver by profession.

3.In the context of the sole contention raised before the

High Court and reiterated before this Court, it is not necessary

for us to dilate on factual aspects considered by the Tribunal

except to state that the Tribunal, on analysis of the evidence

on record, held that Om Prakash died because of the accident

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caused by rash and negligent driving of Truck No.DIL-5955.

Although the Tribunal allowed the claim petition in part, it

absolved respondent No.2 Insurance Company by dismissing

the claim petition against the said respondent. The Tribunal

awarded a sum of Rs.25,000/- to opposite party No.3 Shiv

Rani and Rs.1,75,000/- to claimant Nos.1 to 6, with interest

at the rate of 12% per annum from the date of petition till the

date of payment. In other words, the claim petition was partly

allowed against respondent No.1 - the owner of the offending

vehicle DIL-5955.

4.In the appeal preferred by the appellants/claimants

against the said decision, the only question urged before the

High Court was about the correctness of the view taken by the

Tribunal in absolving the respondent No.2 Insurance

Company even though the offending Truck No.DIL-5955 was

duly insured by the said Insurance Company. The High Court

affirmed the view taken by the Tribunal that there was no

pleading or any evidence adduced by the owner of the

offending Truck to substantiate the fact that the Truck was

driven by one Joginder Singh, whose driving licence was

produced on record. The High Court also noted that there

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could be no presumption that Joginder Singh was driving the

offending vehicle. The appellants have assailed the aforesaid

view taken by the Tribunal and affirmed by the High Court.

5.According to the appellants, the Insurance Company did

not produce any evidence before the Tribunal. As a result, it

was not open to the respondent No.2 Insurance Company to

extricate itself from the liability, having duly insured the

offending vehicle DIL-5955, which fact has been substantiated

by production of the Insurance Policy. A defence being

available to the Insurance Company, that the offending vehicle

was not driven by an authorised person and/or person not

having a valid driving licence, it was obligatory on the part of

the Insurance Company to substantiate that defence and more

so, to rebut the plea taken by the owner of the offending

vehicle that the offending vehicle was being driven by an

authorised person having a valid driving licence. To buttress

this argument, reliance has been placed on the decision of this

Court in the case of National Insurance Co. Ltd. Vs. Swarn

Singh and Ors.

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(2004) 3 SCC 297

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6. We have heard Mr. Sharve Singh, learned counsel

appearing for the appellants and Mr. Rishi Malhotra, learned

counsel appearing for the Insurance Company.

7.In the context of the issue that arises for our

consideration, we may first advert to the claim petition. In the

claim petition, the name of the driver of the offending vehicle

DIL-5955 has not been mentioned. The assertion made in the

claim petition is that Truck No.URS-2735 driven by Om

Prakash was knocked down by the offending Truck

No.DIL-5955 coming from the opposite direction by rash and

negligent driving. The reply filed by respondent No.1 – owner

of the offending Truck DIL-5955 also does not mention the

name of the driver of the offending Truck No.DIL-5955.

Indeed, the reply filed by respondent No.1 asserts that the

vehicle No.DIL-5955 was comprehensively insured by the

respondent No.2 Insurance Company for unlimited liability.

The details of the Insurance Certificate have been mentioned

in the Written Statement. In paragraph 18 of the Written

Statement, however, a vague assertion has been made that on

the alleged date of incident, the offending vehicle DIL-5955

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was plied by an authorised person having a valid driving

permit.

8.In the Written Statement filed by the respondent No.2

Insurance Company to oppose the claim petition, it is asserted

that the claimants should be put to strict proof about the

occurrence of the accident and other related matters. It is then

asserted that no insurance is directly issued by the Head

Office of respondent No.2. The name of the Branch Office by

which the vehicle in question was allegedly insured has not

been disclosed and in its absence, it was difficult to trace out

the insurance policy. Further, the original insurance policy

will have to be summoned from the Insurer or owner of the

vehicle. It is then asserted that neither has the alleged owner

of the vehicle (respondent No.1) informed about any claim nor

have the claimants made any claim to the Insurance

Company. As regards the plea taken by respondent No.1 -

owner of the offending vehicle, in paragraph 29 of the Written

Statement, it has been asserted by respondent No.2 as follows:

“29. That in petition anywhere or in column 16 of the

petition details or driving licence of the alleged driver are

not given and in absence of details it is quite impossible

for answering opposite party to ascertain the driving

licence and its validity on the alleged date of accident,

hence the driving licence if any and its validity on the

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alleged date of accident is denied. The answering

opposite party could not be held liable for payment of

any award if made, unless it is proved that the vehicle

allegedly involved in the alleged accident was driving

under valid driving licence by its authorized driver with

due permission and under control of its owner and under

valid road, permit, fitness, road tax etc. as required

under the provisions of M.V. Act and also was driven

with full compliance of the terms and conditions of the

alleged insurance policy.”

It is not necessary to reproduce the other averments in the

Written Statement filed by respondent No.2.

9.On the basis of these pleadings, the matter proceeded

before the Tribunal. Admittedly, the respondent No.1 - owner

of the vehicle did not produce any evidence in support of his

plea taken in the Written Statement that the offending vehicle

was plied by an authorised person having a valid driving

permit. All that respondent No.1 did was to produce a driving

licence purportedly of one Joginder Singh. The Tribunal

adverted to the said driving licence but found that nowhere

the owner of the vehicle has asserted that the Truck

No.DIL-5955 was in fact driven by said Joginder Singh at the

time of the accident. On the basis of the pleadings, the

Tribunal framed issue No.3 and answered the same in favour

of the Insurance Company as follows:

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“Issue No.3: Whether the Truck No. DIL-5955 was not

being driven by a person having valid and effective

driving licence?

As it has been stated earlier, that the owner of

Truck No. DIL-5955 has filed original driving licence of

one Joginder Singh but he has not mentioned anywhere

that Joginder Singh was driving his truck at the time of

accident. The owner has filed photo copy of insurance

policy in which at paragraph 5 proviso A, it is written

that the insurance company will be liable when driver

was holding a valid and effective driving licence. The

owner of the vehicle has not proved that his driver was

holding a valid and effective driving licence. This issue is

decided in the negative.”

10.This view taken by the Tribunal was assailed before the

High Court by the claimants. No other contention was raised

before the High Court except about the liability of the

Insurance Company. The High Court, after analysing the

record, negatived the said contention in the following words:

“5. The only question which has been raised before this

Court is, whether Insurance Company has rightly been

held not liable by holding that Truck No. DIL 5955 was

not being driven by a person having valid licence. This

Court has to consider, whether findings recorded in

respect of issue no.3 is correct or not.

6. Learned counsel for the appellants could not dispute

that neither any pleadings nor evidence have been led

before Tribunal to suggest or to tell, as a matter of fact,

that aforesaid truck was being driven by Sri Joginder

Singh. It is not in dispute that owner of aforesaid vehicle

produced driving licence which was in the name of Sri

Joginder Singh but at no stage it is pleaded or brought on

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record before Tribunal that Sri Joginder Singh was the

person who was driving aforesaid Truck. This fact has

been noticed by Tribunal in the impugned order as under.

‘Joginder Singh Ko Prastut Kiya Gaya Hai Parantu

Joginder Singh Truck No. 5955 Ka Chalak Tha Yah Kahi

Par Bhi Nahi Kaha Gaya Hai.’

7. Learned counsel for the appellants could not dispute

this fact. In view of above statement of fact that it was

not pleaded or proved before Tribunal, the mere

production of driving licence of Sri Joginder Singh, by

owner of vehicle, cannot raise a presumption that he was

a person who was driving vehicle. The findings recorded

by Tribunal, therefore, cannot be faulted in any manner.

No other argument has been advanced.”

11.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

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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

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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.

12.In the present case, the Tribunal has accepted the claim

of the appellants. It has, however, absolved the respondent

No.2 Insurance Company from any liability for just reasons.

The High Court has also affirmed that view. It rightly held that

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there can be no presumption that Joginder Singh was driving

the offending vehicle at the relevant time.

13.Be that as it may, no grievance about the quantum of

compensation awarded by the Tribunal has been made by the

appellants – claimants (either before the High Court or before

us in this appeal). Hence, that issue does not warrant any

scrutiny. Similarly, the owner of the vehicle (respondent No.1)

has not challenged the findings of the Tribunal as affirmed by

the High Court in favour of the insurer (respondent No.2),

including on the factum that the vehicle was driven by a

person who did not have a valid driving licence at the relevant

time.

14.The next question is: whether in the fact situation of this

case the insurance company can be and ought to be directed

to pay the claim amount, with liberty to recover the same from

the owner of the vehicle (respondent No.1)? This issue has

been answered in the case of National Insurance Company

Ltd. (supra). 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

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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 paragraph 107,

the Court then observed thus:

“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 realize 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 has 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.”

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Further, in paragraph No.110, the Court observed thus:

110. 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.

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(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)xxx

(ix)xxx

(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

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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.”

(emphasis supplied)

15.In the present case, the owner of the vehicle (respondent

No.1) had produced the insurance certificate indicating that

vehicle No. DIL- 5955 was comprehensively insured by the

respondent No.2 (Insurance Company) for unlimited liability.

Applying the dictum in the case of National Insurance

Company Ltd. (supra), to subserve the ends of justice, the

insurer (respondent No.2) shall pay the claim amount awarded

by the Tribunal to the appellants in the first instance, with

liberty to recover the same from the owner of the vehicle

(respondent No.1) in accordance with law.

16.Accordingly, the appeal is allowed to the extent that the

compensation amount awarded by the Tribunal and confirmed

by the High Court shall be paid and satisfied by the insurer

(respondent No.2) in the first instance, with liberty to recover

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the same from the owner of the vehicle (respondent No.1) in

accordance with law.

17.Appeal is disposed of in the aforementioned terms with

no order as to costs.

.………………………….CJI.

(Dipak Misra)

…………………………..….J.

(A.M. Khanwilkar)

…………………………..….J.

(Dr. D.Y. Chandrachud)

New Delhi;

January 19, 2018.