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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 9th 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.1  

1  (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.