RAJENDER PAL & ANR vs ANITA KANTHWAL & ANR

* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 05th February, 2024
Judgment pronounced on: 08th February, 2024
+ MAC.APP. 401/2013
RAJENDER PAL & ANR ….. Appellants
Through: Mr. Alok Sinha and Mr. Vijay
Kumar, Advs.
versus
ANITA KANTHWAL & ANR ….. Respondents
Through: Mr. J.P.N. Sahi, Ms. Aastha
Kaushal and Ms. Musnmat,
Advs.
CORAM:
HON’BLE MR. JUSTICE DHARMESH SHARMA
J U D G M E N T

1. Court notice has been served upon respondent No. 2/Insurance
Company. Learned counsel for respondent No. 2 /Insurance Company
has submitted that they have already been discharged from the liability
to pay compensation by the learned MACT, since the
offending/insured vehicle was admittedly being driven by a minor i.e.
appellant No. 2 in the present appeal.
2. Shorn off unnecessary details, appellant No. 1/registered owner
and appellant No. 2/driver of the offending/insured vehicle, have
assailed the impugned judgment-cum-award dated 21.08.2012, passed
by the learned Presiding Officer, MACT, South-01, Saket Courts,
New Delhi, whereby the claim for compensation moved by the

petitioner/respondent No. 1, who suffered permanent injuries in a
motor accident, was allowed. Further, since the driver of the
offending/insured vehicle was a minor, the plying of the
offending/insured vehicle was deemed to be a fundamental breach of
the conditions of the insurance policy and the Insurance company was
absolved from its liability to pay compensation, and the liability to pay
compensation has been fastened upon respondent No. 2/registered
owner, who is appellant No.1 in the present appeal. Learned counsel
for the appellants has vehemently urged that it is a settled proposition
of law that even in a case of fundamental breach of policy, the liability
to pay compensation shall be initially placed on the insurance
company, which may be granted recovery rights as against the
registered owner and/or driver, jointly and severally.
3. In this regard, learned counsel for the appellants has placed
reliance upon the decisions in (i) Oriental Insurance Co. Ltd. v.
Krishna Batra & Ors.1 and (ii) Pappu and Others v. Vinod Kumar
Lamba and Another2.
4. Having heard the submissions advanced by the learned counsel
for the appellants at the Bar and on perusal of the record, the
submissions advanced are worthy of consideration.
5. First things first, it would be expedient to reproduce the relevant
observations by the learned MACT on the issue of fixation of liability
to pay compensation, which reads as under:

1 MAC.APPL. 418/2008

2 (2018) 3 Supreme Court Cases 208.
3 (2004) 3 SCC 297

“On the question of liability, it is submitted by counsel for
insurance company that driver of the offending vehicle namely
Raghav Kumar/minor was not holding valid driving licence on the
date of accident. This amounts to fundamental breach condition of
policy, thus insurance company is liable to pay compensation to
petitioner. Perusal of material available on record suggests that
driver/first respondent was minor at the time of accident and was
not in possession of valid and effective license to drive the
offending vehicle. It is also found from opening lines of cross-
examination of Sh. Rajinder Pal/owner that he admitted that on the
date of accident the driver of the offending vehicle was not holding
a driving licence and voluntarily stated that driver was minor. In
view of admission of owner/respondent no.2. It is established that
respondent no. 1 was minor and not in possession valid and
effective driving licence to drive the offending vehicle at the time
of accident, which was violation of the terms and conditions of
insurance policy and hence, insurance company is absolved from
its liability. The liability to pay compensation is thus fastened upon
respondent no.2/owner.”

6. On a careful perusal of the aforesaid observation, evidently the
offending vehicle, which was admittedly insured for third party
liability, was being driven by a minor. The cited case of Krishan
Batra (supra) and Pappu (supra) by this court, have relied on the
decision in the case of National Insurance Company v. Swaran
Singh & Ors3, delivered by a three-judge bench of the Supreme
Court, in which issues arose in the context of validity of the driving
licence; not holding a valid driving licence; and the offending driver
possessing a driving licence for a category of vehicles, but driving a
vehicle of a different category. The conclusions arrived at by the
Supreme Court, after referring to and examining a plethora of case
laws, are as under:

110. The summary of our findings to the various issues as raised in these
petitions is 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) An 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 the driver or invalid
driving licence of the driver, as contained in sub-section (2)(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.
(iv) Insurance companies, 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 the said burden would be
discharged, inasmuch as the same would depend upon the facts and
circumstances 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 the insured unless the said breach of
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 insurer under Section
149(2) of the Act.
(vii) The question, as to whether the owner has taken reasonable care 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 persona 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 the
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 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 sub-section (3) of Section 168 of die Ace
the insured falls to deposit the amount awarded in favour of the insurer within
thirty day’s from the date of announcement of the award by the Tribunal.
(xi) The provisions contained in sub-section (4) with the proviso thereunder and
sub-section (5) which are intended to cover specified contingencies mentioned
therein to enable the insurer to recover the amount paid under the contract of
insurance on behalf of the insured can be taken recourse to by the Tribunal and
be extended to claims and defences of the insurer against the 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.
[Underlined portion emphasised]

7. In view of the above stated proposition of law, it would be
expedient to rely on the observation contained in conclusion (vi).
Avoiding a long academic discussion, it is evident that the policy of
insurance clearly stipulated that the insured vehicle shall not be driven
by a minor and/or a person who was not holding a valid driving
licence. However, even in case of fundamental breach of policy
conditions, vide Clause (x) and Clause(xi), it follows that in the larger
public interest, the insurance company can be made liable to pay the
compensation, and thereafter may exercise the recovery rights granted
to it, as against the owner and/or driver, jointly and severally.
8. In view of the forgoing discussion, the present appeal is allowed
and the impugned judgment-cum-award dated 21.08.2012 is hereby

set-aside. The liability to pay compensation to respondent No.1 is
fastened upon the insurance company/respondent No.2, who may
thereafter seek recovery of the amount of compensation paid from the
registered owner/appellant No.1 and 2, as per the law.
9. Before parting with this appeal, it is pertinent to mention that
this Court vide order 15.05.2013, directed the appellant to deposit a
sum of Rs. 2.5 lakhs within four weeks the date of the order, with the
Registrar General, High Court of Delhi. On such deposit, the same
was ordered to be released to respondent No.1/Claimant in terms of
impugned judgment-cum-award dated 21.08.2012. Hence, the
statutory amount for filing the appeal also be released forthwith in
favour of respondent No.1. The amount of Rs. 2.5 lakhs already
released in favour of the claimant and the statutory amount shall be
adjusted and the balance be paid by the respondent No.2/Insurance
Company, with the direction to recover the same from appellant No.1
and 2, jointly and severally, as per the law.

DHARMESH SHARMA, J.
FEBRUARY 08, 2024
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