http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

CASE NO.: Appeal (civil)  3623 of 2006

PETITIONER: Lal Chand

RESPONDENT: Oriental Insurance Co. Ltd

DATE OF JUDGMENT: 22/08/2006

BENCH: Dr. AR. LAKSHMANAN & TARUN CHATTERJEE

JUDGMENT: JUDGMENT (@ SLP(C)NO.20002 of 2004)

Dr. AR. Lakshmanan, J.

       Delay condoned. Leave granted.         Heard learned counsel appearing on either side.         This appeal is directed against the final judgment and  order dated 6.5.2003 passed by the High Court of Punjab &  Haryana at Chandigarh in F.A.O. No.1587 of 2002.  The appellant  before us is the owner of the vehicle, a truck.  The respondent  is the insurer of the vehicle.  The vehicle met with an accident  on 11.10.1998.  The claim petition was filed by the claimants  before the Tribunal.  Accepting their claim, the Tribunal  awarded compensation of Rs.2.70 lakhs along with interest.   The Tribunal held that the accident took place due to rash and  negligent driving of the driver Mam Chand and that the  appellant-owner had not committed any breach of the terms and  condition of the insurance policy and that the Insurance  Company is liable to make the payment of compensation  amount to the claimants as insurer of the truck.

       The Insurance Company, being aggrieved with the  award passed by the Tribunal, filed an appeal before the High  Court.  The High Court modified the order passed by the  Tribunal and directed that the Insurance Company would be  entitled to recover the amount from the owner of the offending  truck as per the law laid down by this Court in Kamla’s case,  reported in 2001 (4) SCC 342.  The High Court also held that the  appellant has contravened the terms and conditions of the  insurance policy as the licence was not issued by the Licensing  Authority, Hyderabad.  The Insurance Company filed application  under section 174 of Motors Vehicle Act for recovery of amount  of Rs.3,27,890/- paid as compensation to the claimants by the  Insurance Company.  The appellant herein filed the reply to the  application in which he averred that the application for recovery  of compensation paid to the claimants by the Insurance  Company is not maintainable as the rights of the parties have  not been determined by the civil court.  The Tribunal held that  the Insurance Company is entitled to recover the money from  the petitioner through the execution application and ordered to  issue a certificate of recovery of amount of Rs.3,27,890/- under  section 174 of Motor Vehicles Act and the same be sent to the  District Collector.                    Aggrieved against the order passed by the High Court,  the appellant has preferred the above appeal in this Court.  The  above appeal was filed with a delay of 339 days.  This Court

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

issued notice on the special leave petition as well as on the  application for condonation of delay.  After notice, the  respondent Insurance Company has also filed a counter  affidavit and the matter was listed today for final hearing.  At  this stage no purpose would be served to  dismiss  the civil  appeal on the ground of delay in filing the appeal.  Since the  notice was ordered on special leave petition and on the delay  and the counter affidavit has already been filed, we condone the  delay and heard the learned counsel appearing on either side,  on merits of the rival claims.

       Mr. Mahabir Singh, learned Senior Counsel appearing  for the appellant submitted that the High Court has not noticed  the finding of the Tribunal, which is based on evidence, and that  the Tribunal had recorded the evidence and had given its award  after examining the evidence on record and the material facts,  and therefore, the said considered order should not have been  set aside by the High Court.  He would further submit that the  owner of the vehicle has taken adequate care and caution to  verify the genuineness of the licence held by the driver.  The  Insurance Company also did not lead any evidence to show that  due and adequate care was not taken by the owner.  He would  further submit that the High Court has failed to appreciate that  there was no evidence that the appellant, who had employed the  driver, had knowledge that the driver was not holding a valid  driving licence.  Our attention was also drawn to the evidence  tendered.  The appellant was examined as RW/1.  He deposed  that he was the owner of the truck in question and that he had  employed Mam Chand as driver of this truck in August, 1998  and had checked his driving licence.  He would further depose  that he had also taken his driving test and satisfied that the  driver was fully competent and conversant to the driving.  It is  further stated that the driver would not have been employed if  he had no driving licence.  In the cross-examination, nothing  has been elicited from the appellant to discredit his testimony  as RW/1.

       Mr. M.K. Dua, learned counsel appearing for the  respondent-Insurance Company submitted that the appellant  has no case on merits as the order of the High Court is well  supported by the law laid down by this Court in the case of New  India Assurance Co. Ltd. versus Kamla & Ors., etc., reported in  2004(4)SCC 342.  He would further submit that the licence  issued to the driver was found to be fake and the High Court  gave categorical finding that the driver was not holding a valid  driving licence and that the appellant committed breach of  terms and conditions of the insurance policy.  He, therefore,  submitted that the order passed by the High Court is not liable  to be interfered with.

       We have perused the pleadings and the orders passed  by the Tribunal and also of the High Court and the annexures  filed along with the appeal.  This Court in the case of United  India Insurance Co. Ltd. versus Lehru & ors., reported in 2003  (3) SCC 338, in paragraph 20 has observed that 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).  He will, therefore, have to check whether the driver  has a driving licence and 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  test of the driver, and if he finds that the driver is competent to  drive the vehicle, he will hire the driver.  

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

       In the instant case, the owner has not only seen and  examined the driving licence produced by the driver but also  took the test of the driving of the driver and found that the  driver was competent to drive the vehicle and thereafter   appointed him as driver of the vehicle in question.  Thus, 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) and the Insurance Company would not then be  absloved of its liability.

       Another decision rendered by a three Judges Bench of  this Court in the case of National Insurance Co. Ltd. versus  Swaran Singh & Ors, reported in 2004 (3) SCC 297, can also be  usefully referred to in the present context.  This Court in para  110 of this judgment gave the summary of their findings to the  various issues as raised in those petitions.  We are concerned  only with sub para (iii) of paragraph 110.  The said sub para (iii)  reads thus: "..................................... (iii)   The breach of policy condition e.g.  Disqualification of the driver or invalid driving  licence of the driver, as contained in sub- section (1)(a)(ii) of Section 149, has 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 the 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 a duly licensed  driver or one who was not disqualified to drive  at the relevant time."

       As observed in the above paragraph, the insurer,  namely the Insurance Company, has to prove that the insured,  namely the owner of the vehicle,  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 a duly  licensed driver or one who was not disqualified to drive at the  relevant point of time.

       We respectfully agree and following the above ruling,  we allow the appeal filed by the owner of the vehicle and  absolve him from any liability as ordered by the High Court.  It  is now brought to our notice that the entire compensation has  already been deposited and the same has been withdrawn by  the claimants.  No other point has been urged by both sides.   We, therefore, allow the appeal and order no costs.