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PETITIONER: NATIONAL INSURANCE CO. LTD.

       Vs.

RESPONDENT: SANTRO DEVI & ORS. ETC.

DATE OF JUDGMENT:       18/11/1997

BENCH: M.M. PUNCHHI, M. SRINIVASAN

ACT:

HEADNOTE:

JUDGMENT:                THE 18TH DAY OF NOVEMBER, 1997 Present:               Hon’ble Mr. Justice M.M. Punchhi               Hon’ble Mr. Justice M. Srinivasan P.P. Malhotra,  Sr. Adv., Vineet Malhotra, Shalendra Sharma, Naresh K. Sharma, Advs. with him for the appellant. Prem Malhotra and Manoj Prasad, Advs. for the Respondents.                       J U D G M E N T      The following Judgment of the Court was delivered: (with SLP(C) No. 6262/97) Leave granted.      This is  an appeal against the judgment and order dated 17.10.96 passed  by a  full Bench of three Hon’ble judges of the High  court of  Punjab and  Haryana in First Appeal From Order No. 75 of 1994.      The minimal facts giving rise to this appeal are these:      There was  a motor  accident which gave rise to a claim for compensation,  duly set up by the claimants/respondents. One of  the questions  which was  brought to  the   fore was whether the  offending motor  vehicle was  being driven by a driver holding  a valid  driving licence. The matter was put to issue  and the  conclusion arrived at by the Tribunal was that the  driver held a valid licence which had validly been renewed .      This finding  stood affirmed  in appeal before the High Court.      Yet it  was taken  by the High Court that a question of law arose  as to  whether a  forged or  a fake  licence,  if renewed would  get validated  or not  so as  to work out the liabilities under  the  Motor  Vehicles  Act.  The  question gathered momentum  in as much as when the cause was before a Division Bench  of the High Court, it referred the matter to a  full   Bench  of  three  Hon’ble  judges  which  in  turn pronounced as follows:      "In view  of the  observations made      above, I  (M.S.Liberhan, J.) answer      the questions posed as under:      (1) A forged driving licence though      may be  validly renewed,  would not      become a valid driving licence or a

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    duly  issued   driving  licence  in      accordance with  the Motor Vehicles      Act.      (2)    The    insured    bonafidely      believing  in  the  validity  of  a      forged  driving  licence  employing      the  holder   of  a   fake  driving      licence  renewed   by  a  competent      authority,  would  not  or  of  the      insurance policy.  It would  not be      violating  either   conditions   of      indemnity  or   the  any  statutory      provisions.       Under       these      circumstances, merely  employing  a      driver  with   a   forged   driving      licence  would   not  absolve   the      insurer of its liability.      (3) In  the absence  of Mensrea  or      knowledge or  intention to  violate      the  terms   of   police   or   the      provisions  of   the  Act   by  the      insured,  the   insurance   company      would  not  be  discharged  of  its      liability  from   indemnifying  the      insurer   or   of   its   statutory      liability to third party.      (4) The  insurance  company  cannot      refuse to  meet its  liability  quo      third party for any act or omission      bonafidely or  otherwise  committed      by the  insured  or  its  liability      inasmuch as  third party  for whose      benefit  the   insurance  has  been      provided, is  not a  privity to any      breach as  being not  in control of      the act  or conduct  of the insured      or its  employee or  insurer. Thus,      the insurance company cannot refuse      to meet  its  liability  quo  third      party.      (5) The  insurer is  duty bound and      liable,  statutorily   as  well  as      contractually  to  reimburse  third      party claim,  for the  tortuous act      committed by  the  insured  or  his      employee as  well as  the liability      incurred by insured or his employee      under the Motor Vehicles Act.      (6)  the   insurance  company   can      neither refuse  to indemnify nor is      discharged from  its  liability  to      the insured or the claimants for an      act of fraud committed by the third      party quo the insured though it has      a  right   to  recover   any   loss      suffered by it from the person, who      committed t  he fraud  or from  any      other  authority,   as  permissible      either  under  tort  or  any  other      statute; and      (7) The  insurance company would be      entitled  to  recover  the  amount,      which it  has paid  to the claimant      from the  insured or  his driver or      employee who  has perpetuated fraud

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    and the  insurance company was made      to  reimburse   third   party   who      suffered  loss   because   of   the      tortuous act  of the insured or his      employee. The  insurer would not be      left without  remedy  to  reimburse      tort in accordance with law for the      failure or  the State  to discharge      common duty  care as  well  as  the      insured for  not observing due care      of  an   ordinary  prudent  person,      expected from  the  insured,  as  a      duty towards the insurer as well as      the person  who has  committed  the      fraud. Remedy  as available  to the      insurer is  not a  decision by this      Court  while   dealing   with   the      question, rather it is left open to      be determined  as and  rather it is      left open  to be  determined as and      when a question arises in the facts      and circumstances  of a  particular      case."      We do  not approve  of the High Court having gone on to endeavour streamlining  the law  when its  ratio on the fact situation was  likely to  be rendered totally obiter. As has been said  above, there  was concurrent  finding recorded by the Tribunal  as well  by the  High Court that the offending vehicle was  driven by a driver who had held a valid licence and it  stood renewed on the date of the accident. There was thus no  occasion for  the  High  Court  to  have  ruled  on suppositions to  the contrary  in order to interpret the law and that  too on a fact situation not available to it. Thus, we are  constrained to  intervene and  hold that  the entire exercise of the High Court in that direction was obiter, not at all  a binding  precedent. In  that sense,  we strike off from the impugned order observations and findings pertaining thereto. Yet at the same time, we are required and do hereby affirm the  substantive part  of the  order, in holding that the  claimanants/respondents   had  rightly   been   granted compensation on account of t he motor accident, on the basis of the  recorded finding  of fact.  We cannot help remarking that the  High Court  instead could have well have spent its time on other priorities.      The appeal  thus would have to be and is hereby allowed in part to the extent and in the manner afore-indicated.      SLP (Civil) No.. 6262/97      This Special  Leave Petition  was tagged  on  with  the above case  on the assumption that the fate of the said case would govern the fate of this SLP. We find that the question as such  was never raised before the High Court. The finding of fact recorded by the Motor Accidents’ Claim Tribunal does not positively  indicate that  the licence  of the driver of the offending  vehicle was fake or forged. All the same, the licence was  got renewed  which reinforced the impression of the High Court that it was not proved substantially that the said licence to begin, was fake or forged. The Special Leave Petition is, therefore, dismissed.