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PETITIONER: NARCINVA V. KAMAT AND ANR. ETC.

       Vs.

RESPONDENT: ALFRED ANTONIO DOE MARTINS AND ORS.

DATE OF JUDGMENT25/04/1985

BENCH: DESAI, D.A. BENCH: DESAI, D.A. MISRA RANGNATH

CITATION:  1985 AIR 1281            1985 SCR  (3) 951  1985 SCC  (2) 574        1985 SCALE  (1)947  CITATOR INFO :  F          1987 SC  70  (4)

ACT:      Motor Vehicles Act:      Accident claim-Motor vehicle owned by partnership firm- Driven by one of the partners-Accident occurs Whether breach of contract  of insurance  policy-Insurance company  whether absolved from  liability-Burden of  proof  whether  lies  on insurance company.

HEADNOTE:      In a  road accident  that took  place two  ladies  were injured.  One  succumbed  to  her  injuries.  The  offending vehicle was  a pick-up van belonging to a firm and was being driven by  one of  the partners.  Two claim  petitions  were filed one  by the heirs of the deceased and the other by the injured. The  Motor Accident  Claims Tribunal  held that the van was  being  driven  at  the  relevant  time  rashly  and negligently. The Tribunal awarded Rs. 75,000 as compensation to the heirs of the deceased and Rs. 3,000 to injured.      Before the  Tribunal, the  Insurance company  contended that according  to the terms of the contract of insurance as evidenced by  the policy  of insurance,  the vehicle  can be driven either  by a  driver in the employment of the insured or with  the permission  of the  insured by  one who holds a valid driving  licence. The  Tribunal found that at the time of the  accident, the  vehicle was being driven by appellant No. 2,  the partner  of the firm, which was the owner of the vehicle and  as the  driver  did  not  produce  his  driving licence, held  that the  driver did not have a valid driving licence and,  in the  absence of  a valid  driving  licence, there was  a breach  of the  contract of  insurance and  the insurance company  was absolved from the liability under the policy of insurance.      A Division  Bench  of  the  High  Court  confirmed  the findings of  the Tribunal  and dismissed  the appeals by the firm and its partners.      On the question whether the insurance company under the contract of insurance is liable to satisfy the award, partly allowing the appeals, ^      HELD: 1. The insurance company has failed to prove that

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there was  a breach of the term of the contract of insurance as evidenced  by the  policy of insurance on the ground that the driver who was driving  the vehicle at the relevant time did not  have a  valid driving  licence. Once  the insurance company failed to prove that aspect, its liability under the contract of insurance remains 952 intact and  unhampered and it was bound to satisfy the award under the comprehensive policy of insurance. [959B-D]      2. The award of the Tribunal as well as the judgment of the High  Court are  modified. The  Insurance Company  is to satisfy the award with interest at 12 per cent from the date of the accident till payment. [959D-E]      3. Where the pick-up van belonging to the firm is being driven by a partner, it can be said that it is done with the permission of  the owner  of the  firm or  with its  implied authority. [956E]      While dealing with the question whether the partner had a valid  driving licence  at the  relevant  time,  both  the Tribunal and  the  High  Court  fell  into  an  error  which resulted in  giving a  clean chit  to the insurance company, Admittedly this  pick up  van could  be used  as  a  private carrier and the insurance company had issued a comprehensive insurance policy  in respect of this van and at the relevant time it was in force. [946E-G]      5. If a breach of a term of contract permits a party to the contract  to not  to perform the contract. the burden is squarely on  that party  which complains  of breach to prove that the breach has been committed by the other party to the contract. The  test in  such a  situation would be who would fail if no evidence is led. [957B-C]      In the  instant case,  not an iota of evidence has been led by  the  insurance  company  to  show  that  the  second appellant did  not have a valid driving licence to drive the vehicle. The  High Court took no notice of the fact that the van be. longed to the firm and every partner for that reason would be  the owner  of the property of the firm. It limited its enquiry  to ascertain  whether the  driver  was  in  the employ of  the insurer.  It completely  overlooked the  fact that the  driver  appellant  No.  2  was  driving  with  the permission of  the insured,  the firm in this case. [957C-H; 951A-B]       6. On a proper analysis and interpretation of the term of contract  of  insurance,  the  insurance  company  cannot escape the  liability if (a) the insured himself was driving the vehicle  or (b)  the driver was in the employment of the insurer and  was driving  on the order of the insurer or not being in  such employment  was driving  under order  of  the insurer or (c) with his permission.                                                     [958B-C]          7. The burden to prove that there was breach of the contract of  insurance was  squarely placed on the shoulders of the  insurance company. It could not be said to have been discharged by  it by  a more  question in cross-examination. The second  appellant was  under no  obligation  to  furnish evidence so as to enable the insurance company to riggle out its liability  under the  contract of insurance. Further the R.T.A. which  issued the  driving licence  keeps a record of the licences issued and renewed by it. The insurance company could have  got the  evidence produced  to substantiate  his allegation. Applying  the test who would fail if no evidence is led, the obvious answer is the insurance company.                                               [958G-H; 959A] 953

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JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal Nos. 153839 Of 1985.      From the  Judgment and  Order dated  25.4.1984  of  the Bombay High  Court in  First Civil Appeal Nos. 37/8 and 38/8 of 1980.      S.K. Mehta for the Appellants.      Jitendra Sharma for the Respondents.      The Judgment of the Court was delivered by      DESAI, J.A  monopoly successfully  avoided its  legally incurred liability  on the  wholly untenable ground. That is the scenario  in these  appeals. Oriental  Fire and  General Insurance Company  Ltd., a  nationalised company  having the monopoly of general insurance is the Fifth Respondent in the first appeal and the second respondent in the second appeal. It would be referred to and ’insurance company’ hereinafter.      An accident  occurred on  Praca de  Jorge Barrete Road, Margao on  May 17,  1976 around 10.30 A.M. in which one Sita Gomes and  her sister-in-law  Ida Menezes  were injured. Ida succumbed to  her injuries  and Sita  Gomes  recovered.  The offending vehicle  was  a  pick-up  van  belonging  to  M/s. Narcinva V.  Kamat, a  firm carrying  on business at Margao, Goa. The vehicle was insured with the insurance company. Two petitions claiming compensation came to be filed; one by the heirs of  Ida and  the other  by Sita.  The  Motor  Accident Claims Tribunal (Tribunal for short) held that the driver of the van  was responsible  for the  accident as  the van  was being driven  at the  relevant time, rashly and negligently. The Tribunal awarded Rs. 75,000 as compensation to the heirs of Ida and Rs. 3,000 to Sita.      In the  proceedings before  the Tribunal, the Insurance Company, appeared  and contended that according to the terms of the  contract of  insurance as evidenced by the policy of insurance, the  vehicle can  be driven either by a driver in the employment  of the insured or with the permission of the insured by one who holds a valid driving licence. In respect of this contention the Tribunal framed issue Nos. 7 and 8 in both the petitions in the following terms; 954           "7.  Whether   the  respondent  No.  6  (insurance      company) proves  that there  is no liability on them as      the respondent No. 2 Narcinva Kamat who was driving the      vehicle involved  in the  accident was  not holding any      effective driving licence ?           8. Whether  the respondent No. 6 proves that under      the provisions of Sec. 95 of the Motor Vehicles Act and      the policy  in force  their liability  in any  event is      limited to  the extent  of Rs.  50,000 in  all both  in      respect of  this Claim  Petition as well as other Claim      Petition filed  in the  same Tribunal on account of the      same accident  being Claim Petition Nos. 22-23/76 filed      in the Tribunal on account of the same accident."      The Tribunal  answered both the issues in favour of the insurance company observing that at the time of the accident the    vehicle  was being  driven by  appellant No.  2,  the partner of  the firm, which was the owner of the vehicle and as the  driver did  not produce his driving licence, it must be held  that the  driver  did  not  have  a  valid  driving licence. The  Tribunal  therefore,  concluded  that  in  the absence of  a valid  driving licence,  there was a breach of the contract  of insurance  and the  insurance  company  was absolved from the liability under the policy of insurance.      The firm  and its  partner preferred two appeals before

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the Panaji  Bench  (Goa)  of  the  High  Court  of  Bombay.A Division Bench of the High Court agreed with the findings of the Tribunal  and dismissed the appeals. Hence these appeals by special leave.              The  scope of  the appeals is very limited. The appeals are  by the  firm, owner  of the  vehicle which  was involved in  the accident  and one of its partner who it was alleged was  shown to  be driving the vehicle at the time of the accident  and while granting leave it was limited to the question: whether  both the Tribunal and the High Court were justified in  holding that  the insurance  company  was  not liable  to   satisfy  the   award  under  the  contracts  of insurance.      The undisputed  facts are  that the  pick-up  van-motor vehicle bearing No. GDT-9510 belongs to the first appellant- firm, and 955 the second  appellant is  the  partner  of  the  firm.  This vehicle was involved in an accident that occurred on May 17, 1976 at around 10.30 a.m. There is a concurrent finding that the vehicle was driven rashly and negligently by the partner who was  then driving the vehicle and that in this accident, Sita and Ida suffered injuries. Ida’s injuries proved fatal. The amount of the compensation awarded in both the petitions is no  more open  to dispute.  The question  is whether  the insurance company  under the contract of insurance is liable to satisfy the award ?      Before  the   Tribunal  and  the  High  Court,  it  was contended on  behalf of  the appellants that at the relevant time, it was not appellant No. 2 but one Pandu Lotlikar, who was respondent  No. 4  before the  Tribunal was  driving the vehicle.  It   has  been  concurrently  found  that  it  was appellant No.  2 who was driving the vehicle. The concurrent finding must be accepted as correct.      Appellant No.  2 is  none other than the partner of the first appellant-firm  which is the owner of the vehicle. The High Court  has extracted  a term  in the  schedule  of  the policy of  insurance pertaining to the pick-up van which may be reproduced from the judgment of the High Court.      "Driver: Any of the following;      (a)  (deleted in type)      (b)  any other  person provided  he is in the Insured’s      employ  and  is  driving  on  his  order  or  with  his      permission.           Provided that  the person  driving holds a licence      to drive  the Motor  Vehicle or  has held  and  is  not      disqualified for holding or obtaining such a licence."      We have  reproduced this  term from the judgment of the High Court  because the  learned counsel  for the  insurance company did  not have  a copy of the policy of the insurance nor the  one was  shown from  the  record.  Of  course,  the Tribunal records  that the  vehicle was insured as a private carrier  and  this  was  culled  out  from  the  claim  form submitted on October 14,1976. It is produced at Ext. 37. One Jaimo Albert was examined on 956 behalf of  the insurance company. He was shown Ext. 29 which was identified  as a  copy of the policy of insurance issued by the  insurance company  in favour of the first appellant. He admitted  that it  was  a  comprehensive  policy  meaning thereby that  the  insurance  company  would  be  liable  to satisfy the  claim of  damage arising  out of the use of the vehicle. He does not speak of any other term of the contract of insurance.      Now would  the insurance company be discharged from the

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liability under the contract of insurance if as contended by it, at  the relevant  time, appellant  No. 2 was driving the vehicle. Appellant  No. 2  is the  partners of the firm. All the partners  of the  firm if  they  have  a  valid  driving licence would be entitled to drive the vehicle. Each partner of the  firm is  an agent  of the  firm as well as the other partner as provided by Sec. 18 of the Partnership Act. Every partner is  entitled to  attend diligently  to his duties in the conduct  of the  business as  provided in Sec. 12 of the Partnership Act. Sec. 26 provides that where by the wrongful act or  omission of  a partner acting in the ordinary course of the  business of  a firm,  or with  the authority  of his partners, loss  or injury  is caused  to any third party, or any penalty is incurred, the, firm is liable therefor to the same extent as the partner.      A conspectus  of these provisions shall show that where the pick-up  van belonging  to the firm is being driven by a partner, it  can be said that it is done with the permission of the owner namely, the firm or with its implied authority.      The next  question is  whether the  partner had a valid driving licence  at the  relevant time. Unfortunately, while dealing with  this aspect of the case, both the Tribunal and the High Court fell into an error which resulted in giving a clean chit  to the  insurance company.  It is  admitted that this pick-up  van could  be used as a private carrier. It is also admitted  that  the  insurance  company  had  issued  a comprehensive insurance policy in respect of this van and at the relevant time it was in force. ’      It is contended on behalf of the insurance company that the second  appellant did  not have a valid driving licence. It is  the insurance  company which complains that there has been a  breach of one of the important terms of the contract of insurance  as evidenced  by the  policy of insurance (the whole of which was 957 not shown to us) and that the second appellant who was shown to be driving the vehicle at the relevant time, did not have a valid  driving licence  to  drive  the  pick-up  van.  The insurance company  complains of breach of a term of contract which would  permit it  to disown  its liability  under  the contract of  insurance. If  a breach  of a  term of contract permits a  party to  the contract  to  not  to  perform  the contract,  the  burden  is  squarely  on  that  party  which complains of  breach to  prove  that  the  breach  has  been committed by  the other  party to  the contract. The test in such a  situation would  be who would fail if no evidence is led. The  language and the format in which issues Nos. 7 and 8 have been cast by the Tribunal clearly casts the burden of proof on  the insurance company. Not an iota of evidence has been led  by the  insurance company  to show that the second appellant did  not have a valid driving licence to drive the vehicle. Mr. J. Sharma, learned counsel who appeared for the appellant urged  that a  question was  asked in  the  cross- examination of the second appellant whether he would produce his driving  licence, and  that as  he failed to produce the same an  adverse inference must be drawn against him that he did not  have a  valid driving  licence. The  High Court has recorded a  finding  in  this  behalf  which  may  first  be extracted in its own words:           "Mr. Cardoso’s contention proceeds on a misreading      of clause  (b) indented  above,  which  brings  to  the      forefront that  the person  driving the vehicle must be      ’in the  insurer’s employ’  and further,  being in such      employment was  driving the vehicle on the order of the      insurer or  with his permission. In this case, the very

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    first premise  is missing  for the  simple reason it is      not even  the second  P appellant’s  case that  he  was      every in the employment of the first appellant firm but      was at  all material  times a  partner thereof. Even if      the first  appellant  held  a  valid  driving  licence,      clause (b)  would not  absolve him  from liability  for      payment, if  the van  had been  driven by  him  at  the      relevant time."      The High  Court took no notice of the fact that the van belonged to the firm and every partner for that reason would be the owner of the property of the firm because the firm is not a  legal entity  in the sense in which the company under the Com- 958 panies Act has a juristic personality. Firm is a compendious name for  the partners.  And  the  High  Court  limited  its enquiry to ascertain whether the first part of the condition is satisfied  viz. whether  the driver  was in the employ of the insurer. It completely overlooked the second clause that the driver  appellant No.  2 was driving with the permission of the  insured, the  firm in  this case.  Two  clauses  are disjointed by  a disjunctives ’or’. On a proper analysis and interpretation of  the term  of contract  of insurance,  the insurance company  cannot escape  the liability  if (a)  the insured himself was driving the vehicle or (b) the driver is in the employment of the insurer and is driving on the order of the insurer or (c) he is driving with his permission. The words with  his permission  does not  qualify the expression ’is in  the insurer’s  employ’. The  clause can  be properly read thus:  ’any other  person with  insurer’s  permission.’ This ought to be so because a friend can always be permitted if he  has a  valid driving licence to drive a friend’s car. If in  every such  situation where  the person  driving  the vehicle is not shown to be the insurer himself or someone in his employment,  the contract  of insurance  would afford no protection and  the insurance  company having  collected the premium would  wriggle out  of  a  loophole.  Therefore  the proper construction  of this condition must be to read it as stated hereinbefore.      Approaching the  matter from  this angle,  if appellant No. 2  was driving the vehicle belonging to the firm, it can be said to be by the insurer itself or with its permission.      The last  question is  whether he  had a  valid driving licence. The High Court has not recorded a clear cut finding on this  point. The  finding of the Tribunal is more evasive then the  one by  the High Court. Mr. Sharma did not dispute that the second appellant had driving licence. His grievance is that  he having  failed to  produce the  same when called upon to do so in the cross examination, an adverse inference be drawn against him that he did not have a valid licence to drive  a   pick-up  van.   The  submission  fails  to  carry conviction with  us. The  burden to  prove  that  there  was breach of  the contract  of insurance was squarely placed on the shoulders of the insurance company. It could not be said to have  been discharged  by it by a mere question in cross- examination. The second appellant was under no obligation to furnish evidence  so as  to enable  the insurance company to wriggle out its 959 liability under  the contract of insurance. Further the R.T. which issues  the driving  licence keeps  a  record  of  the licences issued  and renewed  by it.  The insurance  company could have  got the  evidence produced  to substantiate  his allegation. Applying  the test who would fail if no evidence is led, the obvious answer the insurance company.

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    To some  up of  insurance company  failed to prove that there was  a breach of the term of the contract of insurance as evidenced  by the  policy of insurance on the ground that the driver  who was driving the vehicle at the relevant time did not  have a  valid driving  licence. Once  the insurance company failed to prove that aspect, its liability under the contract of  insurance remains  intact and unhampered and it was bound  to satisfy  the  award  under  the  comprehensive policy of insurance.      Accordingly, both  these appeals  must succeed  and are partly allowed.  The award  of the  Tribunal as  well as the judgment of  the  High  Court  are  modified  directing  the Oriental Fire  and General Insurance Co. Ltd. to satisfy the award with  interest at  12 percent  from the  date  of  the accident till  payment, and  full costs  in  favour  of  the original claimants.  The full  payment to  satisfy the award shall be made within a period of two moths from today. A.P.J.                                      Appeals allowed. 960