# National Insurance Company Ltd v. Smt. Nand Rani and others

- **Citation:** (2011) 2 ILRA 894
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2011-08-02
- **Bench:** Devi Prasad Singh, Dr. Satish Chandra
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/national-insurance-company-ltd-v-smt-nand-rani-and-others-41998
- **Pages:** 8

## Headnote

Motor Vehicle Act, 1988 Section 173Appeal against award of claim tribunalby insurance company-on ground the
driver at the time of accident not
possessing valid driving license-even on
possessing
insurance
policy-held-law
laid down by the larger bench of Apex
Court in Swaran Singh case-insurance
company to pay entire amount of awardwith liberty to recover the same from the
insurer.

Held: Para 14

In view of the above, the appeal is
allowed in part. The impugned award
dated 4.5.2002 is modified to the extent
that it shall be open to the appellant
Insurance
Company
to
recover
the
amount under award from the insured in
terms of the procedure provided by
Hon'ble Supreme Court in the case of
Swaran Singh (supra). It is further
provided that the appellant Insurance
Company shall deposit entire amount
before the Tribunal within two months
and the Tribunal shall release the same
within one month in favour of the
claimant respondents. Deposit made in
2 All] National Insurance Company Ltd. V. Smt. Nand Rani and others 3

895
this Court, shall be remitted to the
Tribunal forthwith by the Registry.
Case law discussed:
T.A.C. 1997 (I) Page 223; 2008 (2) T.A.C. 369
(S.C.); (2003) 3 SCC 338; AIR 2004 SC 1531;
(2008) 9 SCC 284; (2011) 2 SCC 94; 2010 AIR
SCW 7184; 2010 (28) LCD 1188; 2010 (2)
SCC 706; 2007 (6) ADJ 225; 2005 (2) SCC
673; 2008(1) UPLBEC 211

## Text

894 INDIAN LAW REPORTS ALLAHABAD SERIES [2011

Jabar Singh (supra), the application was
moved before the trial court and not
before the competent authority and in that
reference in para-29 of the said report, it
has been said by the Apex Court that
Section 52 of the Act shows that no
statutory appeal is available against any
finding
of
the
trial
court.
While
mentioning about the word 'finding of the
court', the Apex Court virtually meant the
finding of the trial court and in reference
to trial court's order that observation was
made that appeal was not maintainable
and it was only that revision was
maintainable as appeal was maintainable
against the order of the competent
authority. The finding recorded by the
learned Sessions judge, therefore, is
beside the point and beside the case law
which has been mentioned and has been
relied upon by him. There is much
difference in the facts of both the cases
and the appeal is certainly maintainable in
view of the provisions contained in
Section 52 of the Act when an order is
passed by the competent authority.

9. In this view of the matter, the
revision is allowed and the order dated
29.6.2011 passed by the Sessions Judge,
Sultanpur is hereby set aside. The matter
is remitted to the Sessions Judge,
Sultanpur to decide the appeal of the
revisionist in accordance with law on
merit.
---------

APPELLATE JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 02.08.2011

BEFORE
THE HON'BLE DEVI PRASAD SINGH,J.
THE HON'BLE DR. SATISH CHANDRA,J.

First Appeal From Order No. - 424 of 2002

National Insurance Company Ltd.

 ...Petitioner
Versus
Smt. Nand Rani and others 3

 ...Respondents

Counsel for the Petitioner:
Sri S.C.Gualti

Counsel for the Respondents:
Sri N.C. Upadhyay

Motor Vehicle Act, 1988 Section 173Appeal against award of claim tribunalby insurance company-on ground the
driver at the time of accident not
possessing valid driving license-even on
possessing
insurance
policy-held-law
laid down by the larger bench of Apex
Court in Swaran Singh case-insurance
company to pay entire amount of awardwith liberty to recover the same from the
insurer.

Held: Para 14

In view of the above, the appeal is
allowed in part. The impugned award
dated 4.5.2002 is modified to the extent
that it shall be open to the appellant
Insurance
Company
to
recover
the
amount under award from the insured in
terms of the procedure provided by
Hon'ble Supreme Court in the case of
Swaran Singh (supra). It is further
provided that the appellant Insurance
Company shall deposit entire amount
before the Tribunal within two months
and the Tribunal shall release the same
within one month in favour of the
claimant respondents. Deposit made in
2 All] National Insurance Company Ltd. V. Smt. Nand Rani and others 3

895
this Court, shall be remitted to the
Tribunal forthwith by the Registry.
Case law discussed:
T.A.C. 1997 (I) Page 223; 2008 (2) T.A.C. 369
(S.C.); (2003) 3 SCC 338; AIR 2004 SC 1531;
(2008) 9 SCC 284; (2011) 2 SCC 94; 2010 AIR
SCW 7184; 2010 (28) LCD 1188; 2010 (2)
SCC 706; 2007 (6) ADJ 225; 2005 (2) SCC
673; 2008(1) UPLBEC 211

(Delivered by Hon'ble Devi Prasad Singh,J.)

1. Heard Sri S.C. Gulati, learned
counsel for the appellant, and Sri Rajendra
Jaiswal, learned counsel for the opposite
party No.1 to 3. None appears on behalf of
the opposite party No.4.

2. Present appeal under Section 173
of Motor Vehicles Act, 1988 has been
preferred against the impugned award
dated 4.5.2002 passed by the Motor
Accident Claims Tribunal/Special Judge,
Kanpur in M.C.A. No.305 of 2000.

3. The claim petition preferred by the
claimant respondents is in view of the
accident occurred on 30.10.2000 whereby
the deceased was returning to village
Roopha from village Chandra within the
premises of police station Maholi, District
Sitapur. While he was returning to his
village on his cycle, a Truck No.A-S-25/B1907 coming from Shahjahanpur being
driven rashly and negligently, hit the
deceased. As a consequence thereof, he
succumbed to injuries on spot. An F.I.R.
was lodged and the claimants approached
the Tribunal for payment of compensation.
The Tribunal framed issues with regard to
insurance cover, accident and driving
license and arrived at the conclusion that
the accident occurred because of rash and
negligent driving of the truck by the driver
and awarded compensation to the tune of
Rs.1,82,000.00.

4. The solitary argument advanced by
Sri S.C. Gulati learned counsel for the
appellant is that the driver was not
possessing driving license. Hence the
appellant Insurance Company is not liable
to pay compensation. He has invited
attention to the finding recorded by the
Tribunal. The Tribunal recorded finding
that even if driving license is fake, the
Insurance Company cannot shirk from its
liability to pay compensation. The Tribunal
relied upon the judgment of Punjab and
Haryana High Court, reported in T.A.C.
1997 (i) Page 233: National Insurance
Co. Ltd., Vs. Smt. Santro Devi and
others, whereby, it has been held that the
dependants of the deceased cannot be
deprived of compensation even if the
driving license is forged. The operative
portion of the judgment of the Tribunal is
reproduced as under:

"In T.A.C. 1997 (i) Page 233 at page
234 National Insurance Co. Lt. Versus
Smt. Santro Devi and others it was held by
the Hon'ble High Court of Punjab and
Haryana that in a case where the owner of
the Vehicle bonafidely believed in the
validity at the forged driving licence and
employed the driver having fake driving
licence then that would not amount the
violation of contract of the insurance
policy. Merely employing a driver with a
forged driving licence would not absolve
the insurer of its liability. Mensrea of
knowledge or intention of the insured to
violate the terms of policy or the
provisions of the Act will have to be
proved.

In view of the aforesaid rulings, it is
clear that the insurance company can not
shirk its liability to pay the compensation
even if the driver of the defaulting vehicle
was found holding a fake driving licence.
896 INDIAN LAW REPORTS ALLAHABAD SERIES [2011

The insurance company can be exonerated
from its liability only if it is proved that the
insured had deliberately violated the terms
and conditions of the insurance policy. In
other words in a case where the owner of a
vehicle had employed a driver holding a
forged driving licence he can be hold
responsible for the breach of the terms and
conditions of the insurance policy only
when it is proved that he knew at the time
of employing the driver that the driver was
holding a take or forged driving licence.
He can not be held guilty for the breach of
terms and conditions of the insurance
police O.P. No.9 when he bonafidely
believed in the validity of a forged driving
licence. Mensrea or knowledge or intention
of the insured to violate the terms of Policy
or the provisions of the act will have to be
proved.

In the present case there is no
evidence on the record to prove that the
owner (o.p. no.1) was knowing at the time
of employing the driver that he was having
a forged driving licence, there is no
evidence on record to conclude that
o.p.no.1 had Mensrea or Knowledge or
intention to violate the terms of policy by
employing a driver having a forged driving
licence."

5. From the plain reading of the
award, it appears that the Tribunal is of the
view that since the owner has engaged the
driver bona fidely possessing driving
license,
hence
he
cannot
be
held
responsible with regard to payment of
compensation.
While
assailing
the
impugned award, Sri S.C. Gulati learned
counsel relied upon the case reported in
2008 (2) T.A.C. 369 (S.C.): Sardari and
others. Vs. Sushil Kumar and others.
The sum and substance of the argument
advanced by Sri S.C. Gulati is that fake
driving license, amount to violation of
terms and condition with regard to
insurance policy and in the event of breach
of the condition of the insurance policy,
the Insurance Company may not be held
responsible to pay compensation. The
argument advance by the learned counsel
for the appellant carries weight. The
payment of compensation in pursuance of
the insurance policy is based on agreement
entered into between the parties and in
case, the condition of agreement is
violated, then the consequence in terms
and conditions provided in the agreement
shall follow. Accordingly, in case valid
driving license is part and parcel of
Insurance Policy under the agreement then
breach of such condition shall make out a
case favouring the Insurance Company not
to pay compensation. The relevant para-7
of the judgment of Sardari (supra) is
reproduced as under:

"7. The concurrent finding of fact
herein is that Sushil Kumar never held a
license. The owner of the vehicle has a
statutory obligation to see that the driver of
the vehicle whom he authorized to drive
the same holds a valid license. Here again,
a visible distinction may be noticed, viz.
where the license is fake and a case where
the license has expired, although initially
when the driver was appointed, he had a
valid license.

The
question
came
up
for
consideration before this Court in United
India Insurance Co. Ltd. Vs. Gian Chand
and Others [(1997) 7 SCC 558], wherein it
was held;

"12. Under the circumstances, when
the insured had handed over the vehicle for
being driven by an unlicensed driver, the
Insurance Company would get exonerated
2 All] National Insurance Company Ltd. V. Smt. Nand Rani and others 3

897
from its liability to meet the claims of the
third party who might have suffered on
account of vehicular accident caused by
such unlicensed driver...."

A three Judges' Bench of this Court in
National Insurance Co. Ltd. Vs. Swaran
Singh and Others [(2004) 3 SCC 297],
upon going through the provisions of the
Act as also the precedents operating in the
field, laid down the following dicta;

"84. We have analysed the relevant
provisions of the said Act in terms whereof
a motor vehicle must be driven by a person
having a driving licence. The owner of a
motor vehicle in terms of Section 5 of the
Act has a responsibility to see that no
vehicle is driven except by a person who
does not satisfy the provisions of Section 3
or 4 of the Act. In a case, therefore, where
the driver of the vehicle, admittedly, did
not hold any licence and the same was
allowed consciously to be driven by the
owner of the vehicle by such person, the
insurer is entitled to succeed in its defence
and avoid liability. The matter, however,
may be different where a disputed question
of fact arises as to whether the driver had a
valid licence or where the owner of the
vehicle committed a breach of the terms of
the contract of insurance as also the
provisions of the Act by consciously
allowing any person to drive a vehicle who
did not have a valid driving licence. In a
given case, the driver of the vehicle may
not have any hand in it at all e.g. a case
where an accident takes place owing to a
mechanical fault or vis major. (See Jitendra
Kumar 22 .)"

In National Insurance Co. Ltd. Vs.
Kusum Rai and Others [(2006) 4 SCC
250], a Bench of this Court (wherein one
of us was a member) held;

11. It has not been disputed before us
that the vehicle was being used as a taxi. It
was, therefore, a commercial vehicle. The
driver of the said vehicle, thus, was
required to hold an appropriate licence
therefor. Ram Lal who allegedly was
driving the said vehicle at the relevant
time, as noticed hereinbefore, was holder
of a licence to drive a light motor vehicle
only. He did not possess any licence to
drive a commercial vehicle. Evidently,
therefore, there was a breach of condition
of the contract of insurance. The appellant,
therefore, could raise the said defence.

14. This Court in Swaran Singh
clearly laid down that the liability of the
Insurance Company vis-vis the owner
would depend upon several factors. The
owner would be liable for payment of
compensation in a case where the driver
was not having a licence at all. It was the
obligation on the part of the owner to take
adequate care to see that the driver had an
appropriate licence to drive the vehicle.

The question as regards the liability of
the owner vis-`-vis the driver being not in
possession of valid license has also been
considered in para 89 in Swaran Singh
(supra)."

6. In view of the settled proposition
of law, the appellant Insurance Company
does not seem to be responsible to
implement the award with regard to
payment of compensation.

7. On the other hand, Sri Rajendra
Jaiswal
learned
counsel
representing
claimants has referred two other judgments
of Hon'ble Supreme Court reported in
(2003) 3 SCC 338: United India
Insurance Co. Ltd. Vs. Lehru and others
and AIR 2004 SC 1531: National
898 INDIAN LAW REPORTS ALLAHABAD SERIES [2011

Insurance Co. Ltd. Vs. Swaran Singh
and others.

8. It shall be relevant to mention here
that both these judgments have been
considered by the Hon'ble Supreme Court
in the case of Sardari (supra). However,
one aspect of the matter seems to have not
been discussed in the case relied upon by
Sri S.C. Gulati, that is, whether the insurer
may be directed to pay compensation with
liberty to recovery the same from the
owner of the vehicle.

9. In the case of Lehru (supra)
Hon'ble Supreme Court observed as under:

"20. When an owner is hiring a driver
he will therefore have to check whether the
driver has a driving licence. If the driver
produces a driving licence which on the
face of it looks genuine, the owner is not
expected to find out whether the licence
has in fact been issued by a competent
authority or not. The owner would then
take the test of the driver. If he finds that
the driver is competent to drive the vehicle,
he will hire the driver. We find it rather
strange that Insurance Companies expect
owners to make enquiries with RTO's,
which are spread all over the country,
whether the driving licence shown to them
is valid or not. Thus where the owner has
satisfied himself that the driver has a
licence and is driving competently there
would
be
no
breach
of
Section
149(2)(a)(ii). The Insurance Company
would not then be absolved of liability. If it
ultimately turns out that the licence was
fake the Insurance Company would
continue to remain liable unless they prove
that the owner/insured was aware or had
noticed that the licence was fake and still
permitted that person to drive. More
importantly even in such a case the
Insurance Company would remain liable to
the innocent third party, but it may be able
to recover from the insured. This is the law
which has been laid down in Skandia 's
Sohan Lal Passi 's and Kamla 's case. We
are in full agreement with the views
expressed therein and see no reason to take
a different view."

Thus, their lordships of Hon'ble
Supreme Court have held that where,
owner was hiring the driver, then it is his
duty to check whether the driver has valid
driving license. Their lordships held that
even if the driving license is fake, the
Insurance Company will remain liable to
pay to the innocent third party with liberty
to recover from the insured.

10. In the case of Swaran Singh
(supra) after considering number of
judgments of the Hon'ble Supreme Court,
their lordships had considered various
issues and summed up the finding in para
105 of the judgment [not considered iin
Sardari (supra)] which is reproduced as
under:

"105. 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.
2 All] National Insurance Company Ltd. V. Smt. Nand Rani and others 3

899

(ii) Insurer is entitled to raise a
defence in a claim petition filed under
Section 163 A 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 wherefor
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
900 INDIAN LAW REPORTS ALLAHABAD SERIES [2011

claim for compensation by the claimants
and the 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 subsection (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 subsection (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."

11. Thus, from Swaran Singh's case
(supra), it is obvious that the Tribunal has
got power to direct the insurer to pay
compensation and recover the same from
the owner on a certificate issued by the
Tribunal to the Collector in the same
manner as provided under Section 174 of
Motor Vehicles Act, 1988, the certificate
will be issued for recovery as arrears of
land revenue only if as required by subsection (3) of Section 168 of the Act. The
insurer failed to deposit the amount
awarded in favour of the insurer within 30
days from the date of announcement of
award by the Tribunal.

12. Though it has been submitted by
Sri S.C. Gulati, vide later judgment of
Sardari Lal (supra) Insurance Company
shall
not
be
responsible
to
pay
compensation and the amount of award
should be recovered from the owner but
argument advanced by Sri S.C. Gulati is
not sustainable for two reasons: firstly,
because in the case of Sardari Lal (supra),
the question involved with regard to
recovery from the insured has not been
dealt with specifically and secondly, the
judgment of Swaran Singh (supra) is of
larger Bench decided by three Hon'ble
Judges of Hon'ble Supreme Court whereas,
the judgment of Sardari Lal (supra) has
been pronounced by two Hon'ble Judges.

13. Accordingly, keeping in view the
proposition of law settled by Hon'ble
Supreme Court, with regard to binding
precedent that the judgment of larger
Bench is binding, Swaran Singh (supra)
holds the field to decide the issues
involved, vide, (2008) 9 SCC 284 Rajbir
2 All] Santosh Kumar Singh and others V. State of U.P. and another

901
Singh Dalal Vs. Chaudhary Dental
Universy Sirsa, (2011) 2 SCC 94, Safiya
Bee Vs. Mohd. Vajahath Hussain @
Fasi, 2010 AIR SCW 7184, Sant Lal
Gupta and others Vs. Modern Cooperative Group Housing Society Ltd.
and others, 2010 (28) LCD 1188, Smt.
Sheeladevi and another Vs. State of U.P.
And others (full bench), 2010 (2) SCC
706, Mahesh Ratilal Shah Vs. Union of
India, 2007 (6) ADJ 225 : Murali Singh
and another Versus Deputy Director of
Consolidation, Varanasi and others,
2005 (2) SCC 673 : Central Board of
Dawoodi
Bohra
Community
and
another Versus State of Maharashtra
and another, (2008 (1) UPLBEC 211,
Manju Lata Agrawal (Smt.) Vs. State of
U.P. and another). The case of Swaran
Singh (supra), shall occupy the field with
regard to payment of compensation and
liability of Insurance Company to the
extent of repugnancy.

14. In view of the above, the appeal
is allowed in part. The impugned award
dated 4.5.2002 is modified to the extent
that it shall be open to the appellant
Insurance Company to recover the amount
under award from the insured in terms of
the
procedure
provided
by
Hon'ble
Supreme Court in the case of Swaran
Singh (supra). It is further provided that
the appellant Insurance Company shall
deposit entire amount before the Tribunal
within two months and the Tribunal shall
release the same within one month in
favour of the claimant respondents.
Deposit made in this Court, shall be
remitted to the Tribunal forthwith by the
Registry.

15.

The
appeal
is
allowed
accordingly in part. Costs easy.
---------

REVISIONAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 03.08.2011

BEFORE
THE HON'BLE RAJESH CHANDRA,J.

Criminal Revision No. 4615 of 2010

Santosh Kumar Singh and others

 ...Revisionists
Versus
State of U.P. and another ...Opp. Parties

Counsel for the Petitioner:
Sri Sudhir Kumar Singh

Counsel for the Respondents:
Sri Hemant Kumar
Sri S.K. Ojha
A.G.A.

Criminal Revision summoning order for
alleged offence under section 498-A,
323, 504, 506 I.P.C.-from statement of
witnesses recorded under section 200
and 202 Cr.P.C.-demand of dowry, abuse
and
beating-established-held
order
passed by Trail Court perfectly valid-No
interference called for.

Held: Para 9

A
perusal
of
the
impugned
order
indicates that the same has been passed
after considering the evidence available
on record and there is no illegality in the
same.
There
was
evidence
of
the
complainant to the effect that there was
demand of dowry and due to nonfulfillment of the same, the complainant
was
being
abused,
threatened
and
beaten as well. This order of the trial
court is perfectly valid and call for no
interference at this stage.
Case law discussed:
1964 (SCR) 639; 1976 (1) ACC 225 (S.C.);
2002 (44) A.C.C. 168 (S.C.)