Question for determination

When the driver of a motor vehicle covered by a policy of insurance drives vehicle involved in accident with fake licence, whether insurance company has to prove that there is "willful" breach of specific conditions of policy or is it sufficient to insurance company to prove that driving licence possessed by driver is fake licence by reason of which insurance company stands exonerated from its liability to indemnify owner of vehicle involved in the accident.

Background facts The above question falls for consideration in this appeal in the following brief background of the case. Respondents 1 to 4 herein (hereafter, claimants) filed M.V.O.P.No.248 of 1997 under Sections 140, 143-A and 166 of Motor Vehicles Act, 1988 (the Act, for brevity) before Motor Accident Claims Tribunal-cum-I Additional District Judge, Guntur, claiming a compensation of Rs.2,00,000/- as compensation for death of Dupati Koteswari (deceased). Be it noted first claimant is husband and claimants 2 to 4 are married daughters of deceased. Deceased aged 42 years statedly was earning Rs.1,200/- per month as agricultural labourer. On 16.4.1997 at about 9.30 pm while she was walking from Doppalapudi cross roads to go to festival (Sreerama Navami) fair, milk lorry bearing No.AP 16T 936 belonging to Bondadi Srinivasa Rao (owner-fifth respondent herein) dashed against her. She sustained head and spinal cord injuries and became unconscious. She was shifted to Hospital. After three days, she succumbed to injuries. Offending lorry was insured with appellant (insurer). In Original Petition, owner of vehicle and insurer are arrayed as respondents 1 and 2 respectively. Owner of vehicle remained ex parte. Insurer filed written statement contending that driver did not hold valid licence and that claimants 2 and 3 being married daughters are not entitled for compensation. Besides these, they also disputed quantum of compensation. Learned Tribunal besides believing evidence of claimants on the question of negligence also applied principle of res ipso loquitor and held that driver of insured lorry drove the vehicle in a rash and negligent manner. Rejecting the plea of appellant insurer seeking exoneration on the ground that driver was having a fake licence, and therefore, there was breach of specific condition of policy, learned Tribunal awarded a sum of Rs.1,60,000/- as compensation in favour of first respondent duly dismissing claim of married daughters. In this appeal learned Counsel for appellant raised following contentions.

Learned Tribunal fell in error in appreciating evidence of R.Ws.1 to 3 and Exs.B1 to B4 which according learned Counsel would show that driver of vehicle Vongati Issac used fake licence and that driving licence No.2432/VJA/83 was in fact issued to one P.Rama Krishna, S/o.Gopaiah of Governorpet. Learned Counsel for respondent/claimant argued as follows. Merely because driver of vehicle involved in accident was having fake licence, insurer cannot escape from liability unless they show that there was 'wilful' breach of conditions of insurance policy in allowing a person with fake driving licence to drive vehicle. At the relevant time, driver was having a licence, which was found to be fake. Therefore it does not mean that owner (fifth respondent) allowed Issac knowing fully well that driver was having a fake licence. When driving licence is produced before him owner is not expected to know whether licence is fake or forged one. In the absence of any other evidence to show that owner has not taken diligent steps or negligent in verifying driving licence, owner must be indemnified for vicarious liability incurred due to accident. He placed reliance on National Insurance Co. Ltd. v Swaran Singh (2004) 3 SCC 297 : AIR 2004 SC 1531, United India Insurance Co. Ltd. v Gian Chand (1997) 7 SCC 558 : AIR 1997 SC 3824 : 1997 ACJ 1065 and Oriental Insurance Co. Ltd. v Meena Variyal (2007) 5 SCC 428 : AIR 2007 SC 1609 : 2007 ACJ 128