1 2025:CGHC:16510 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR MAC No. 863 of 2017 1. The Oriental Insurance Company Limited Branch Office, Above of Axis Bank Dimarapur Raigarh, Chhattisgarh ..............Insurer, ... Appellant versus 1. Bihanu S/o Ketachighriya, Aged About 50 Years Occupation Agriculture, R/o Village Lalpur, Thana Tamnar, District Raigarh, Chhattisgarh. 2. Padma W/o Bihanu, Aged About 45 Years Occupation Agriculture, R/o Village Lalpur, Thana Tamnar, District Raigarh, Chhattisgarh ...............Claimants 3. Sushil Gupta S/o Jhasketan, Aged About 24 Years Occupation Vehicle Driver, R/o Village Lalpur, Thana Tamnar, District Raigarh, Chhattisgarh ..............Vehicle Driver 4. Sudama Rathiya S/o Faguram Rathiya, R/o Village Lalpur Urba, Thana Tamnar, District Raigarh, Chhattisgarh ...............Vehicle Owner ... Respondent(s) For Appellant : Mr. Sudhir Agrawal, Advocate For Respondent No.1 & 2 : None though served. For Respondent No.3 & 4 : Mr. A.K. Yadav, Advocate Hon'ble Shri Justice Parth Prateem Sahu Order On Board 8/4/2025 1. This is insurance company's appeal under Section 173 of the Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act of 1988'), challenging its liability under award dated 06.04.2017 2 passed by the learned 1st Additional Motor Accident Claims Tribunal, Raigarh in Claim Case No.75/2014. 2. Facts of the case, in brief, is that claimants/respondent No.1 & 2 herein preferred an application under Section 166 of the Act of 1988 claiming a sum of Rs.46,36,000/- on account of death of their son Kartim Ram in a road accident. It was pleaded in the application that non-applicant No.1 by driving the motorcycle in a rash and negligent manner caused the accident in which deceased, who was riding pillion on the said motorcycle, sustained grievous injuries and succumbed thereto while undergoing treatment. Non-applicant No.1 and 2, driver and owner of offending vehicle respectively did not appear before the Claims Tribunal and therefore they were proceeded ex-parte. Non-applicant No.3 Insurance Company filed its reply admitting that the motorcycle was insured with it but denied the liability on the ground of violation of essential conditions of insurance policy that driver of motorcycle was not having valid and effective driving license at the time of accident. 3. The Claims Tribunal, on the basis of the evidence adduced by the respective parties, came to the conclusion that accident occurred due to rash and negligent driving of motorcycle by non-applicant No.1 which resulted in death of deceased (one of pillion riders), during course of treatment; disbelieved the version of claimants that deceased was working as labourer 3 and earning Rs.8,000/- per month by recording that claimants failed to prove the employment and income of deceased by leading any documentary evidence in that regard; and there was no violation of any of the conditions of insurance policy, held the insurance company liable to indemnify the insured. Consequently, the Claims Tribunal allowed application in part, awarded compensation of Rs.5,01,000/- and fastened liability upon the Insurance Company to satisfy the award. It is this award which is impugned in this appeal 4. Learned counsel for the appellant insurance company would argue that the Claims Tribunal erred in fastening liability upon insurance company overlooking the fact that on the date of accident, respondent No.2, driver of offending vehicle, was not having valid and effective driving license. Since there was violation of condition of insurance policy, the liability to satisfy the amount of compensation cannot be fastened upon the insurance company. He submits that after getting knowledge of accident, the insurance company has also sent notice/letter through registered post to respondent No.4, owner of offending vehicle, to submit copy of driving license of respondent No.3, driver of offending vehicle, but the said letter remain unreplied. During pendency of proceeding before the Claims Tribunal, appellant insurance company submitted an application under Order 11 Rule 16 CPC, which was allowed in part vide order dated 11.2.2016 and it was ordered that owner and driver of 4 offending vehicle may produce the copy of driving license before the Claims Tribunal. However, the copy of driving license of the driver of offending vehicle was not produced, which shows that on the date of accident, driver of offending vehicle was not having valid and effective driving license to drive offending vehicle. There was violation of condition of insurance policy and therefore liability ought not to have been fastened upon the insurance company. Hence, the finding of the Claims Tribunal fastening liability upon appellant Insurance Company to satisfy the impugned award is liable to be set aside. 5. Learned counsel appearing on behalf of respondent No.1 and 2 vehemently opposes the submissions of learned counsel for appellant and submits that the Claims Tribunal based on evidence available on record has rightly passed the impugned award fastening liability upon the insurance company because on the date of accident, the offending vehicle was duly insured with the insurance company. There is no error in the finding recorded by the Claims Tribunal that appellant insurance company failed to prove that respondent No.3, driver of offending vehicle, was not having valid and effective driving license to drive the offending vehicle. Hence, the impugned award does not call for any interference. 6. Heard learned counsel for the respective parties and perused the record of the Claims Tribunal. 5 7. The question for determination in this appeal is whether the Claims Tribunal justified in fastening liability upon insurance company to indemnify the owner of offending vehicle in the given facts and circumstances of the case? 8. First Information Report (Ex.P-2) reveals that the accident had taken place on 31.10.2012, the Ward Boy of Government K.G. Hospital, Raigarh gave first information regarding death of deceased in hospital and based on which, offence under Sections 279, 337 & 304A of IPC was registered against the driver of offending vehicle. Ex.P-1 is the charge sheet which was ultimately submitted by the Investigating Officer and a glance of which goes to show that said charge sheet has been filed against driver of offending vehicle i.e. respondent No.3 herein, on the allegations that, he had committed the offences punishable under Sections 279, 337 & 304A of IPC and Section 46 (2), 177, 3/181, 130 (3) and 177 of the Act of 1988. Perusal of charge sheet reveals that since the accused/ respondent No.3 herein did not produce his driving license, he was charge-sheeted under Section 3/181 of the Act of 1988 as well apart from under Sections 279, 337 & 304A of IPC. Section 3 of the Act of 1988 provides for necessity for driving license stating that no person shall drive a motor vehicle in any public place unless he holds an effective driving license issued to him authorizing him to drive the vehicle. Section 181 of the 6 Act of 1988 provides for punishment for contravention of Section 3 of the Act of 1988. 9. Appellant Insurance Company had taken a very specific stand that on the date of accident, driver of offending vehicle was not having a driving license, which amounts to violation of condition of insurance policy. In support thereof, appellant Insurance Company had examined Ashok Kumar as AW3-1, who was working as Assistant C.A. in Raigarh Branch Office. This witness has clearly stated that as per criminal case papers, driver of offending vehicle was not having driving license. He has further deposed about the notice sent to the driver and owner of offending vehicle. Nothing could be elicited in the cross examination of this witness so as to disbelieve his testimony. 10. Ex.D-2 to Ex.D-4 are the legal notices sent by appellant Insurance Company to the driver and owner of offending vehicle i.e. respondents No.3 & 4 herein, calling upon them to produce driving license, but these notices were neither replied nor license was produced. 11. Respondent No.3 herein, driver of offending vehicle, appeared through counsel before Claims Tribunal, contested the case by filing written statement but there is no whisper about possessing valid and effective driving license on the date of accident nor it was produced during pendency of proceeding before the Claims Tribunal. No other evidence has been 7 brought on record by the respondent No.3 to establish that he was possessing valid and effective driving license or authorized for driving any motorcycle on the date of occurrence. Subsequently, vide order dated 11.1.2016 respondent No.3 and 4 herein have been proceeded ex-parte. 12. Respondent No.4, owner of offending vehicle, having appeared through counsel not contested the application by not filing written statement and also had not adduced evidence claiming that driver of offending vehicle was having valid and effective driving license on the date of accident or he did not consciously permit him to drive the offending vehicle. The fact of respondent No.3 herein drove the offending vehicle without driving license was not impeached by respondent no.4 herein. 13. Section 134 (c) of the Act of 1988 stipulates certain duties upon the driver and owner of vehicle in the event of accident. Among one of the duty is to produce driving license of driver. In the case at hand, said duty is not discharged by the driver and owner of offending vehicle even though the insurance company has reminded the duty of producing driving license cast on the driver and owner under Section 134 of the Act, by issuing legal notice, but the same is not produced either by the driver or owner of offending vehicle before the Claims Tribunal. When the insurance company has issued notice, it is the duty cast on the driver or owner to produce driving license, but the same is not produced either by the owner or driver of offending 8 vehicle before the Claims Tribunal or in the office of the Insurance Company. If he did not respond to the summons and did not appear nor did he produce the driving licence, an adverse inference can be drawn that he was not holding a valid driving licence. 14. Perusal of order sheet dated 11.2.2016 of Claims Tribunal would reveal that an application under Order 11 Rule 12 CPC was filed on behalf of insurance company for directing the non- applicants to produce papers of offending vehicle including license. However, since the owner and driver were proceeded ex-parte, therefore, the Claims Tribunal while disposing of said application vide order dated 11.2.2016 directed the claimants to produce the same if available with them. 15. Whether a driver is having a valid driving license or not is within the exclusive know-ledge of the driver himself or at certain times the owner of the vehicle may be having that information as he is expected to know before vehicle is handed over to such driver. In the case at hand, it is apparent that insurance company made all possible efforts to get the driving license of driver and thereby discharged the burden cast upon it in establishing that the driver of offending vehicle was not having a valid driving license to drive offending vehicle on the date of accident and there was violation of condition of insurance policy. 9 16. The net result of the foregoing discussions is that it is conclusively established that on the date of accident, respondent No.3 herein, driver of offending vehicle, was not having valid and effective driving license to drive offending vehicle. If respondent No.3 had valid driving license, nothing prevented him from producing the same on demand being raised by insurance company by issuing Ex.D-3 or before the police during investigation of criminal case arising out of the accident in question or along with his written statement filed before the Claims Tribunal. So, it has to be presumed that the respondent No.3 herein did not have a valid driving license to drive offending vehicle (motorcycle) at the time of accident. Hence, the very act of respondent no.4 permitting respondent No.3 to drive the offending vehicle without driving license would amount to violation of policy condition and and for which the insurance company cannot be held responsible for indemnifying the owner. 17. Now the question arises whether the insurance company is required to be completely exonerated? 18. In case of Pappu vs. Vinod Kumar Lamba, reported in (2018) 3 SCC 208, Hon’ble Supreme Court considering its earlier decision in case of National Insurance Company Ltd. vs. Swaran Singh, reported in (2004) 3 SCC 297 and further considering that there exists a valid insurance policy, has held thus: 10 “17. The next question is: whether in the fact situation of this case the insurance company can be and ought to be directed to pay the claim amount, with liberty to recover the same from the owner of the vehicle (respondent No.1)? 18. This issue has been answered in the case of National Insurance Company Ltd. vs. Swaran Singh, (2004) 3 SCC 297. In that case, it was contended by the insurance company that once the defence taken by the insurer is accepted by the Tribunal, it is bound to discharge the insurer and fix the liability only on the owner and/or the driver of the vehicle. However, this Court held that even if the insurer succeeds in establishing its defence, the Tribunal or the Court can direct the insurance company to pay the award amount to the claimant(s) and, in turn, recover the same from the owner of the vehicle. The three-Judge Bench, after analysing the earlier decisions on the point, held that there was no reason to deviate from the said well-settled principle. In paragraph 107, the Court then observed thus: "We may, however, hasten to add that the Tribunal and the court must, however, exercise their jurisdiction to issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued, despite arriving at a finding of fact to the effect that the insurer has been able to establish that the insured has committed a breach of contract of insurance as envisaged under sub- clause (ii) of clause (a) of sub-section (2) of Section 149 of the Act, the insurance company shall be entitled to realize the awarded amount from the owner or driver of the vehicle, as the case 11 may be, in execution of the same award having regard to the provisions of Section 165 and 168 of the Act. However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it has not been able to do so, the insurance company may initiate a separate action therefor against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given an opportunity to defend at all. Such a course of action may also be resorted to when a fraud or collusion between the victim and the owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage." 19. In the present case, the owner of the vehicle (Respondent No.1) had produced the insurance certificate indicating that Vehicle No.DIL 5955 was comprehensively insured by Respondent No.2 (insurance company) for unlimited liability. Applying the dictum of National Insurance Company Ltd. vs. Swaran Singh, (2004) 3 SCC 297, to subserve the ends of justice, the insurer (Respondent 2) shall pay the claim amount awarded by the Tribunal to the appellants in the first instance , with liberty to recover the same from the owner of the vehicle (Respondnet 1) in accordance with law.” 19. The Hon'ble Supreme Court of India in the case of Manuara Khatun & others vs. Rajesh Kumar Singh & others reported in (2017) 4 SCC 796 has held that when the insurance policy is valid then even though the Insurance Company is absolved of the liability to pay the compensation amount, still the Insurance Company can be directed to pay the amount with a right to 12 recover the same from the owner of the vehicle by way of execution of the judgment and award. 20. In case of Shamanna & ors vs. The Divisional Manager, The Oriental Insurance Co. Ltd. & Ors. reported in (2018) 9 SCC 650, Hon’ble Supreme Court has held that if the driver of the offending vehicle does not possess a valid driving license, the principle of ‘pay and recover’ can be ordered to direct the insurance company to the pay the victim and then recover the amount from the owner of the offending vehicle. 21. Similar view is expressed by Hon’ble Supreme Court in case of Singh Ram vs. Nirmala & ors, reported in (2018) 3 SCC 380. 22. In view of the above judgments of the Hon'ble Apex Court, now it is not res integra that if there is a violation of the conditions of the policy of insurance, which is not fundamental condition then insurer is liable to pay the compensation to the third party and it can recover from owner of the vehicle in an appropriate proceeding. 23. In case at hand, it is not disputed by learned counsel for appellant Insurance Company that there was a valid insurance policy, which is also clear from the original record of the Claims Tribunal. It is also not in dispute that the deceased was a third party. Thus, keeping in mind the law settled with respect to principle of pay and recover; the fact that there was a valid insurance policy in respect of offending vehicle, the claimants being a third party, in the opinion of this Court, the ends of 13 justice will be served if the Insurance Company is directed to pay the compensation awarded and recover it from the owner of the vehicle. 24. Resultantly, the appeal is allowed in part. Finding of the Claims Tribunal that there is no violation of policy condition is set aside and it is held that there was violation of condition of insurance policy and hence, while exonerating appellant Insurance Company from its liability to indemnify the insured (respondent No.4 herein), appellant Insurance Company is directed to first pay the amount of compensation as awarded by the Claims Tribunal to claimants/respondents No.1 and 2 herein and then to recover the same from the registered owner of offending vehicle in accordance with law. Appellant Insurance Company is directed to deposit the amount awarded by the Claims Tribunal along with interest @ 6% p.a. from the date of filing of application till its realization, within a period two months from the date of order. Any amount already deposited by Insurance Company shall be adjusted. Rest of the conditions of impugned award shall remain intact. Sd/- (Parth Prateem Sahu) Judge roshan/- SYED ROSHAN ZAMIR ALI Digitally signed by SYED ROSHAN ZAMIR ALI