2012 Supreme(Mad) 579

2012 (1) TNMAC 226
High Court of Judicature at Madras
THE HONOURABLE MR.JUSTICE S. MANIKUMAR
The ICICI Lombard General Insurance Company Ltd. & Others
Versus
Annakkili & Others
C.M.A.No.2126 of 2009 & M.P.Nos.1 and 2 of 2009, C.M.A.No.3175 of 2011 & M.P.Nos.1 & 2 of 2011, C.M.A.No.3534 of 2011 & M.P.No.1 of 2011, C.M.A.No.3806 of 2011 & M.P.No.1 of 2011, C.M.A.No.100 of 2012 & M.P.No.1 of 2012, C.M.A.No.179 of 2012 & M.P.No.1 of 2012
Decided On : 06-02-2012

Ratios
a. When a policy condition is violated by the insured, the insurer could avoid the contract because of such violation and refuse to indemnify the insured but on this ground, it could not avoid its liability to the third party.
b. On the ground of non-possession of driving licence by the driver of the vehicle, the insurance companies could not avoid their liability to the third parties.
c. Unless the insurance companies establish by reliable evidence that the mandatory provision of law was violated by the insured or the policy condition was violated, they could not refuse to indemnify the insured.
d. Report of the investigation officer engaged by the insurer could not be relied on regarding the fact stated in it unless the person on whose statement, the report was prepared was examined in the Court as a witness.
e. On the mere filing of the report of an investigation officer engaged by the insurer, the non-availability of driving licence on the part of the driver could not be proved.
f. By merely writing a letter to the driver or owner of the vehicle asking them to produce the driving licence and showing their failure to comply with the demand made in that letter, the insurance companies could not raise a presumption that the driver was not in possession of a driving licence at the relevant time.
g. Merely by showing that the driver was prosecuted for an offence of non-possession of driving licence, it could not be presumed that he was not in possession of valid driving licence at the time of the accident.
h. Merely on the admission of the driver before the Criminal Court regarding the absence of driving licence with him, it could not be presumed that the insured was guilty of negligence and failed to exercise due care regarding the use of the vehicle.
i. When the driver is in possession of a driving licence in respect of light transport vehicle, liability could not be avoided by the insured if the driver had driven light commercial vehicle unless the breach by the insured was shown as willful.
j. Non-possession of the driving licence by the driver could be proved by the insurer by examining the officials of the RTO office of the area within whose jurisdiction, the driver reside.
k. Absence of a valid driving licence by the driver could be proved by the insurer as a defence to the claim of the victim only by letting evidence in this regard and not merely by pleading it in its counter.
l. Once it is proved that an accident is covered by a compulsory insurance, it is for the insurer to prove that it comes within an exception to avoid its liability to indemnify the insured.
m. A person who alleges breach of the policy condition, must prove the same.
n. In the absence of any material on record to prove that there is a breach of the conditions of driving licence by the owner, so fundamental to have contributed to the accident, the liability of the insurance company to indemnify the owner, cannot be absolved.

Headnote:(A)Motor Vehicles Act, 1988(59 of 1988)-Sec.149-Indian Evidence Act, 1872(1 of 1872)-Sec.3, 106-Motor accident-Compensation-Insurer-Liability-Refusal-Avoidance-Driving licence-Fake licence-Renewal-Failure-Evidence-Witness-RTO-Summon-Examination-Burden of proof-In a group of appeals preferred by the insurance companies, they contested their liability to pay compensation to the victim of motor accidents by contending that there was no licence to the driver/licence was fake/licence available was not for the type of the vehicle insured/licence was not renewed which was resisted by the insured and the victims-While the insurer contended that their liability arose as a result of a contract with the insured and when the terms of the contract were violated, they were exonerated of their liability to all including the victim-Victims contended that the liability on the insurer was statutory in nature which could not be avoided merely because of the terms of the contract were violated by the insured but in some cases, it may give right to the insurer to recover the compensation from the insurer after complying with the award passed-Held, violation of policy condition may entitle the insurer to refuse to indemnify the insured but it could not enable the insurer to avoid its liability to the victim/third party- Insurance companies could not discharge its burden regarding the violation of the policy condition on the mere filing of the report of the investigation officer engaged by it or report of the motor vehicles inspector or the police officer or by simple pleading in its counter-To discharge its burden, it had to examine the officials of the RTO in that regard-In the absence of clear proof of the violation of the basic policy condition, the insurer could not avoid its liability to indemnify the insured-Appeals of the insurance companies were decided accordingly.

        (B)Motor Vehicles Act, 1988(59 of 1988)-Sec.147, 149- Motor accident-Compensation-Insurer-Liability-Condition-Violation-Refusal-Avoidance-When a policy condition is violated by the insured, the insurer could avoid the contract because of such violation and refuse to indemnify the insured but on this ground, it could not avoid its liability to the third party.

       Thus, indisputably the contract of insurance is purely between the insurer and the insured and that the third party is not a privy to the same. In the event of any violation of statutory provisions or policy conditions by the insured, it would be open to the insurer to repudiate the contract of insurance to the insured or contend that inasmuch as, there is a breach or violation of the statutory provision and therefore, there is no obligation for the insurer to indemnify the insured, for any loss sustained by the insured, in the event of any liability fastened on the insured and required to be indemnified under Section 147 of the Motor Vehicles Act. But the insurer cannot avoid its payment of compensation to a third party victim. Para 104

       (C)Motor Vehicles Act, 1988(59 of 1988)-Sec.149- Motor accident-Compensation-Insurer-Liability-Refusal-Avoidance-Driving licence-On the ground of non-possession of driving licence by the driver of the vehicle, the insurance companies could not avoid their liability to the third parties.

       If the insurer establishes a breach as explained by the Apex Court, then it would be exonerated of its liability towards the insured, but by no stretch of imagination, it can claim exoneration from payment of compensation to the injured, third party or the legal representatives of the deceased. Having considered the interpretation of Section 149(2)(a)(ii) vis-a-vis the provision to sub-section 4 and 5 of the Motor Vehicles Act, extensively, the Supreme Court has not excluded the liability of the insurer to third parties. Therefore, when the Insurance Companies have a statutory duty or obligation to pay compensation to third party victims, opposing their claim solely on the ground of non possession of licence, by the driver of the vehicle, at the time of accident, in my view, would be contrary to statutory provision and the decisions of the Supreme Court. At best, the insurer can only seek for exoneration of its liability towards the insured and not against the third party. Para 111

       (D)Motor Vehicles Act, 1988(59 of 1988)-Sec.149-Indian Evidence Act, 1872(1 of 1872)-Sec.106-Motor accident-Compensation-Insurer-Liability-Avoidance-Policy condition-Violation-Burden of proof-Unless the insurance companies establish by reliable evidence that the mandatory provision of law was violated by the insured or the policy condition was violated, they could not refuse to indemnify the insured.

       In a claim petition before the Claims Tribunal, the insurance company fails to lead reliable and cogent evidence to support its contentions regarding breach of policy conditions or statutory provisions of the Motor Vehicles Act and also the fact that the insured has consciously allowed a driver, who had no licence to drive the vehicle and thus, guilty of negligence or non fulfillment of conditions of policy regarding use of the vehicle by a duly licenced driver, their liability to the insured to indemnify under the Contract of insurance, cannot be avoided. The inevitable conclusion would be that the liability is compulsory to the third party, as it is statutory. Para 112

       (E)Motor Vehicles Act, 1988(59 of 1988)-Sec.149-Indian Evidence Act, 1872(1 of 1872)-Sec.3-Motor accident-Compensation-Insurer-Liability-Refusal-Avoidance-Driving licence-Fake licence-Proof-Witness-Investigation officer-Examination-Report of the investigation officer engaged by the insurer could not be relied on regarding the fact stated in it unless the person on whose statement, the report was prepared was examined in the Court as a witness-On the mere filing of the report of an investigation officer engaged by the insurer, the non-availability of driving licence by the driver could not be proved.

       Mere tendering of evidence through an Investigating Officer, by filing a report, would not amount to establishing their defence under Section 149(2)(ii), unless the insurer establishes non-possession of licence, by letting in documentary evidence, through an official from the RTO office, within whose jurisdiction, the driver ordinarily resides. Report by the Investigation officer cannot be given any credence, for proving the manner of accident or for that matter, there was no licence at the time of accident or to prove that there was willful breach on the part of the insured, unless the insurance companies examine those persons examined by the Investigator, otherwise, the report would be based on information, collected from persons, who are not allowed to be cross examined by the claimants or the owner or driver or both, if they enter appearance and defend the manner of accident or for that matter, even the licence aspect. Even if the owner or driver remains absent, the report would be mere collection of some information and it is not a direct evidence. It could be even based on hearsay. Para 116

       (F)Motor Vehicles Act, 1988(59 of 1988)-Sec.149-Indian Evidence Act, 1872(1 of 1872)-Sec.3, 106-Motor accident-Compensation-Insurer-Liability-Refusal-Avoidance-Driving licence-Production-Demand-Failure-Presumption-By merely writing a letter to the driver or owner of the vehicle asking them to produce the driving licence and showing their failure to comply with the demand made in that letter, the insurance companies could not raise a presumption that the driver was not in possession of a driving licence at the relevant time.

       The question as to whether the owner has taken a reasonable care to find out, as to whether the driving licence produced by the driver is a fake one or for the matter that, the owner of the vehicle has committed a breach of the contract of insurance, consciously by allowing the vehicle to be driven by a person, who did not possess any licence, depends upon the facts and circumstances of each case and in that context, this Court is of the view that mere writing letters to the owner or the driver of the vehicle to furnish the licence particulars or to produce the licence, by itself is not sufficient proof of evidence, to establish lack of licence or breach on the part of the owner of the vehicle. If notices are refused or evaded by the driver or owner, as the case may be, or by both, it is also the duty of the Insurance Companies to summon the official from the Regional Transport Authority, to produce the licence particulars, if any, or produce any record from the Regional Transport Officer’s Office. Para 119

       (G)Motor Vehicles Act, 1988(59 of 1988)-Sec.3, 5, 149-Indian Evidence Act, 1872(1 of 1872)-Sec.3, 106-Motor accident-Compensation-Insurer-Liability-Refusal-Avoidance-Driving licence-Failure-Driver-Prosecution-Merely by showing that the driver was prosecuted for an offence of non-possession of driving licence, it could not be presumed that he was not in possession of valid driving licence at the time of the accident.

       Even assuming that the driver or the owner of the offending vehicle insured with the Company, is charge sheeted under Sections 3 and 5 r/w. 181 of the Motor Vehicles Act, that would not ipso facto amount to proof that he did not possess any valid and effective driving licence, because, even during trial, the accused therein, by producing licence, if any, or for any other valid reasons, has a chance of acquittal. When the prosecution has to prove the charge, beyond all reasonable doubt, the Claims Tribunal cannot record any positive finding on the charge. However, if any record is produced before the Claims Tribunal, from the Regional Transport Officer, who maintains the licence particulars, then it would be an authentic piece of evidence. Again, filing of a charge sheet alone would not give rise to any conclusion that the insured committed a breach, by consciously and recklessly allowing the driver, who did not possess a licence to drive the vehicle. It is for the Claims Tribunal to arrive at a reasonable conclusion on the basis of oral and documentary evidence adduced before it. If no rebuttal evidence is let in by the owner, then the Claims Tribunal may consider, as to whether there is a specific plea of breach of policy condition or statutory provisions and whether any evidence has been let in by the company to substantiate, breach. Para 128

       (H)Motor Vehicles Act, 1988(59 of 1988)-Sec.149-Indian Evidence Act, 1872(1 of 1872)-Sec.3-Motor accident-Compensation-Insurer-Liability-Refusal-Avoidance-Driving licence-Fake licence-Criminal Court-Admission-Merely on the admission of the driver before the Criminal Court regarding the absence of driving licence with him, it could not be presumed that the insured was guilty of negligence and failed to exercise due care regarding the use of the vehicle.

       In a given case, where there is clear admission of guilt of non-possession of a licence before the competent criminal Court, by the driver himself and if a judgment is rendered thereon, it could be a material evidence let in, on behalf of the Insurance Company to contend that they have discharged their initial burden of proof of non-possession of licence, but reading of the judgment of the Supreme Court in Swaran Singh’s case and other judgments, extracted in the earlier portions of this judgment, would not lead to definite conclusion that the insured was guilty of negligence and failed to exercise due care regarding the use of the vehicle and that it was the owner of the vehicle has committed breach of policy conditions and the provision of the Act, by consciously allowing a person, to drive a vehicle, when did not hold any licence.Para 143

       (I)Motor Vehicles Act, 1988(59 of 1988)-Sec.10, 149-Indian Evidence Act, 1872(1 of 1872)-Sec.3, 106-Motor accident-Compensation-Insurer-Liability-Refusal-Avoidance-Driving licence-Endorsement-Failure-When the driver is in possession of a driving licence in respect of light transport vehicle, liability could not be avoided by the insured if the driver had driven light commercial vehicle unless the breach by the insured was shown as willful.

       When a person is duly licenced under Section 10 to drive a Light Motor Vehicle not exceeding 7500 k.g. in weight, it could reasonably be presumed that he has the same skill to drive a transport vehicle of the same weight, and when such a transport vehicle can also be a public service vehicle, as defined under Section 2(35) of the Motor Vehicles Act, whether the insurance company could claim for exoneration from its liability to pay compensation to a third party, merely because, the licence does not bear the endorsement as required under rule 16(3) of the Act. Certainly, the driver knows to drive the kind of vehicle, but the only deficiency is that there is no endorsement or authorisation by a competent authority to drive a commercial vehicle. In my humble view, in such circumstances, breach of the condition specified in Section 149(2)(a)(ii) of the Motor Vehicles Act, would not be so fundamental, to be the cause for the accident, to avoid the insurer’s liability to pay compensation to a third party, as observed in Paragraph 102 Clause (vi) in Swaran Singh’s case. Again, it is for the insurance company to establish wilful breach of policy conditions on the part of the insurer to award its liability towards the insured. Para 147

       (J)Motor Vehicles Act, 1988(59 of 1988)-Sec.149-Indian Evidence Act, 1872(1 of 1872)-Sec.3, 106-Motor accident-Compensation-Insurer-Liability-Refusal-Avoidance-Driving licence-Failure-Evidence-Witness-RTO-Summon-Examination-Non-possession of the driving licence by the driver could be proved by the insurer by examining the officials of the RTO office of the area within whose jurisdiction, the driver reside.

       Therefore, to ascertain as to whether the driver did possess the licence or not, at the time of accident, the best and direct evidence that could be obtained is only from the Regional Transport Officer, within whose jurisdiction, the driver resides and as per the address provided in the claim petition. The contention of the Insurance Companies that it may not be possible for the insurer to verify from each and every Regional Transport Offices in the State, is one aspect, that could be accepted, but when Rule 23 of the Central Motor Vehicles Rules, mandates maintenance of a State Register in Form 10, as stated supra, then the insurer can also ascertain from the Government or the Transport Commissioner, who is expected to maintain a consolidated list of licence particulars. The rule is in existence for a long time. Hence, this Court is of the considered view that mere entry in the Motor Vehicles Inspector’s report, regarding non-production of licence, cannot be the conclusive proof that the driver did not hold any licence at all, to avoid its liability to the third party. Para 161

       (K)Motor Vehicles Act, 1988(59 of 1988)-Sec.149-Indian Evidence Act, 1872(1 of 1872)-Sec.106-Motor accident-Compensation-Insurer-Liability-Refusal-Avoidance-Driving licence-Fake licence-Renewal-Burden of proof-Evidence-Witness-RTO-Summon-Examination-Absence of a valid driving licence by the driver could be proved by the insurer as a defence to the claim of the victim only by letting evidence in this regard and not merely by pleading it in its counter.

       The defences available to the insurance company to avoid its liability to the insured are provisions enabling the insurer to prove that the insured was guilty of negligence regarding use of vehicle by a duly licenced driver. In which case, if the companies prove breach of policy, they are entitled to realise the award amount from the owner of the vehicle. If no steps are taken by the insurer to lead evidence in support of the plea that the driver was holding a valid driving licence, at the time of accident, they cannot be said to have discharged the statutory liability caused upon them for payment of compensation to the insured. Mere pleadings in the counter affidavit or written statement by the insurers, alleging breach of violation of statutory provisions of the Motor Vehicles Act, by itself would not amount to proof that they have discharged their burden to avoid their statutory liability in respect of third party claim. They have to lead reliable and cogent evidence to substantiate their contention regarding breach of policy condition, so as to claim exoneration from their liability towards the insured. Violation of terms and conditions of policy by itself would not have the effect of exonerating the insurer from the statutory liability cast upon them to pay compensation to a third party victim, but it is always open to the insurer to get the amount recovered from the insured, in the same proceedings. Para 164

       (L)Motor Vehicles Act, 1988(59 of 1988)-Sec.149-Indian Evidence Act, 1872(1 of 1872)-Sec.106-Motor accident-Compensation-Insurer-Liability-Refusal-Avoidance-Condition-Violation-Burden of proof-Once it is proved that an accident is covered by a compulsory insurance, it is for the insurer to prove that it comes within an exception to avoid its liability to indemnify the insured-A person who alleges breach of the policy condition, must prove the same-In the absence of any material on record to prove that there is a breach of the conditions of driving licence by the owner, so fundamental to have contributed to the accident, the liability of the insurance company to indemnify the owner, cannot be absolved.

       A combined reading of Sections 146, 147 and 149 of the Act leads to only one conclusion that it is the thumb rule that once it is proved that an accident is covered by a compulsory insurance, it is for the insurer to prove that it comes within an exception to avoid its liability to indemnify the insured. It is well settled proposition of law that a person who alleges breach, must prove the same. In the absence of any material on record to prove that there is a breach of the conditions of driving licence by the owner, so fundamental to have contributed to the accident, the liability of the insurance company to indemnify the owner, cannot be absolved. Para 166