HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF FEBRUARY, 2026 BEFORE THE HON'BLE MS. JUSTICE TARA VITASTA GANJU MISCELLANEOUS FIRST APPEAL NO.3369 OF 2019(MV-I) BETWEEN: THE DIVISIONAL MANAGER, M./S RELIANCE GENERAL INSURANCE COMPANY LTD., REGISTERED OFFICE NO.19, HITACHAND MARG, BALLARD ESTATE, MUMBAI, NO.REP BY ITS MANAGER, M/S.RELIANCE GENERAL INSURANCE COMPANY LTD., NO.28, 5TH FLOOR, EAST WING, CENTENARY BUILDING, M.G. ROAD, BANGALORE-560 045. … APPELLANT (BY SRI. D.VIJAYA KUMAR., ADVOCATE) AND: 1. DODDISIDDASHETTY S/O BASAVASHETTY, NOW AGED ABOUT 54 YEARS, R/A EKKADAHALLI VILLAGE, KOLLEGAL TALUK, CHAMARAJANAGAR DISTRICT-571 111. 2. KRISHNA S/O SIDDEGOWDA, AGED ABOUT 30 YEARS, R/O KOLIPALYA, MALAVALLI TOWN, MANDYA DISTRICT-571 605. (DRIVER OF TAYOTA QUALIS REG NO.KA-19-MB-8118). HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 2 3. SMT. INDRA W/O ANANDA, AGED ABOUT 38 YEARS, R/O NO.15/E, KALASIPALYA, NEAR SWARNA TRANSPORTS, BANGALORE-560 018. (OWNER OF TATOTA QUALIS, REG NO.KA-19-MB-8118). 4. RAVI S/O RAJANNA, AGED ABOUT 33 YEARS, R/O NO.65/02, GANIGARAPALYA, BANASHANKARI, KANAKAPURA ROAD, BANGALORE-560 062 … RESPONDENTS (BY SRI. GURUDATH.B.S., ADVOCATE FOR R1; V/O DTD:23.10.2025, NOTICE TO R2 TO R4 IS DISPENSED WITH) THIS MFA IS FILED U/S 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED: 28.09.2018, PASSED IN MVC NO.39/2010 ON THE FILE OF THE ADDITIONAL DISTRICT AND SESSIONS JUDGE, CHAMARAJANAGAR, (SITTING KOLLEGAL) AND M.A.C.T., AWARDING COMPENSATION OF RS.2,22,783/- PETITIONER SHALL NOT BE ENTITLED FOR INTEREST BY VIRTUE OF ORDER DATED: 16.04.2016 DURING THE PERIOD OF DISMISSAL AND RESTORATION OF THE PETITION I.E., FROM 10.01.2013 TO 16.04.2016. HOWEVER, THE PETITIONER SHALL BE ENTITLED FOR INTEREST AT 6 PERCENT P.A. FROM 16.04.2016 UNTIL REALIZATION OF AMOUNT AT 6 PERCENT P.A. HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 3 THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MS. JUSTICE TARA VITASTA GANJU ORAL JUDGMENT 1. The present appeal seeks to challenge an Impugned Judgment and Award dated 28.09.2018 passed in MVC No.39/2010 by the learned Addl. District and Sessions Judge, Chamarajanagar (hereinafter referred as “Impugned Award”). By the Impugned Award, the claim petition filed by Respondent No.1 has been allowed and compensation in a sum of Rs.2,22,783/- has been granted along with 6% interest. 2. The learned counsel for the appellant has raised two grounds of challenge. Firstly, he contends that even though the learned Trial Court found that there was no valid driving licence, the pay and recovery order was not granted. Secondly, it is contended that the compensation awarded was calculated taking notional income at the rate of HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 4 Rs.6,000/- p.m. and since the accident occurred in the year 2009, the notional income was Rs.5,000/-p.m. 3. The learned counsel for Respondent No.1 submits that the issue of not having a driving licence was raised by the Insurance Company before the learned Trial Court as well. However, he fairly submits that the orders for pay and recovery were not granted to the appellant/Insurance Company. 4. The brief facts are that, on 22.06.2009 the respondent/claimant while transporting wooden logs on his bullock cart was enroute Hondarabalu. At around 6:00 a.m. in the morning, a Tata Qualis bearing Registration No. KA- 19-MB-8118 driven by Respondent No.2 hit the bullock cart and the respondent/claimant from the rear side. Because of this accident, the respondent/claimant fell down from the bullock cart and sustained injuries all over his body and the bullock cart was also damaged. The respondent/claimant was hospitalized for his injuries and took treatment as an inpatient for approximately ten days and sustained fracture HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 5 of right side of the ribs, spinal cord and back. A complaint was registered against Respondent No.2/owner and driver of the vehicle in Crime No.135/2009. The respondent/claimant filed a claim petition before the learned Tribunal seeking compensation for his injuries. Notices were issued to the driver, owner of the vehicle and also the Insurance Company. Despite service, they remained absent and the only contesting party before the Tribunal was the appellant/Insurance Company. 5. Based on the pleadings between the parties, the following issues were framed: “(1) Whether the petitioner proves that the accident in question occurred on 22-06-2009 at about 6.00 A.M. on account of rash and negligent driving of the driver of the Toyota Qualis bearing reg. No. KA-19-MB-8118 near Kollegal MM Hills main road, Madhuvanahally in front of the Ranger Chandrashekar's land and due to he sustained grievous injuries? (2) Whether the respondents prove that they are not liable to pay compensation for the reasons stated in the objection statement? (3) Whether the petitioner is entitled to compensation? If so, what is the quantum of compensation he is entitled to and from whom? (4) What order or awards?” HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 6 6. The respondent/claimant examined himself as PW-1 and had marked 16 documents in support of his contention exhibited as P1 to P16 which includes FIR, complaint, Mahazar, Wound Certificate, etc. The officer of the Insurance Company was examined as RW-1. The learned Trial Court based on the evidence produced, directed that compensation should be awarded in the following manner: Sl. No Particulars Amount (Rs.) 1 Towards medical and hospitalization expenses 10,583-00 2 Towards attendants and nourishment charges 20,000-00 3 Towards loss of earnings during the period of treatment (Rs.6000X3 months) 18,000-00 4 Towards pain and suffering 20,000-00 5 Towards conveyance charges 10,000-00 6 Towards loss of earning on account of permanent disability [Rs.6,000X12X9%X15] 97,200-00 7 Towards loss of amenities 20,000-00 8 Towards the pecuniary loss (bullocks Rs.12,000/- and bullock cart Rs.15,000/-) 27,000-00 Total 2,22,783-00 7. As stated above, the ground challenged by the appellant/Insurance Company is limited to the non-grant of pay and recovery rights despite a finding by the learned HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 7 Tribunal that the driver did not have a valid Driving Licence. The learned Tribunal has examined this issue noting that the driver did not have valid and effective Driving Licence and has however given a finding that since the insurance policy was valid, compensation be awarded. The relevant extract is set out below: “15. Issue No-2: At the cost of repetition, it is relevant to note that the driver of the vehicle, owner of the vehicle and GPA holder for the owner of the vehicle, all of them have remained absent despite Court notices having been duly served on them. The 4th respondent is the insurance company under which the offending vehicle was insured. In the written statement filed by the 4th respondent, the 4th respondent has taken a specific stand that the driver of the vehicle did not have a valid and effective driving licence to drive the category of the vehicle [Qualis car] and therefore contends that they are not liable to pay compensation. In this regard, law is well settled that when the insurance company admits to have issued the policy and its currency, the company is estopped from denying indemnification of the insured on the ground that the driver did not have valid driving licence. The said proposition of law is laid down by the Hon'ble Apex Court in the case of Kamala Mangalal Vayani V/s United India Insurance Company Limited reported in 2011[2] TAC page 390. Further, in the above said case, it was held that it is for the insurance company to prove the contentions raised by them. However, in this case the 4th respondent is unable to justify the stand taken by them in their written statement. That apart, in the cross-examination of RW-1 by the counsel for the petitioner, it was elicited that the accident took place due to the rash and negligent driving of the driver of the car bearing No. KA-19-MB-8118 and further that the insurance policy was in vogue as on the date of the accident. Therefore, the 4th respondent cannot deny the claim on HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 8 the ground urged by them. Hence, I answer issue No. 2 in the negative”. [Emphasis Supplied] w 8. Having heard the learned counsel for both the parties and on perusal of the appeal papers, the following points would arise for consideration in this appeal: "i) Whether pay and recovery rights are to be granted? ii) Whether the compensation is required to be interfered with?" 9. The appellant has contended that since notices were issued to the respondents i.e., the owner and driver of the vehicle and they did not appear nor produce the Driving Licence, no further steps were required to be taken by the Insurance Company as the Insurance Company cannot be held liable. The Court is unable to agree. Although this averment has been set out and acknowledged by the learned Tribunal, the respondent has not placed on record any document in support of the fact that the driver did not have a valid Driving Licence or that the owner had hired a driver without a driving Licence. Although para 9 of the written statement contains such an averment, there is no HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 9 document placed on record in support. The appellant has also produced its legal claim Manager as RW1. RW-1 has admitted to the fact that the offending vehicle was validly insured under a policy. In addition, the appellant has also stated that since the driver of the vehicle did not have a Driving Licence there is a breach of the insurance policy. The relevant extract of the evidence of RW-1 is set out below: “I state that, Toyota quails Car bearing No. KA-19-MB-8118 was validly insured in our 4th respondent company on the date of alleged accident said to have occurred on 22-06- 2009, under package policy bearing No. 1405792311003972 covering the risk from 19-06-2009 to 18-06-2010 and the policy was in force and the liability of our 4th respondent insurance company is as per the terms and conditions of the policy and subject to the provisions of motor vehicles Act 1988 and the rules made there under. xxx xxx xxx I state that, the 1st respondent driver of the car bearing No. KA-19-MB-8118 was not having valid and effective driving licence to drive the car as on the date of accident and hence this respondent company is not liable to indemnify the 2nd respondent owner/insured against any claims and pay compensation to the petitioner…. [Emphasis Supplied] 9.1. The respondent / Insurance Company also states that that notice under Order XXII, Rule 8 of the CPC for HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 10 production of Driving Licence was sent, however, despite service of notice, no licence was produced. Even in the Written Statement, the same averment was made. 9.2. An examination of the evidence of the respondent/ Insurance Company reflects that although notices were issued by the respondent/Insurance Company to the owner/driver, the same could not be delivered as they were returned with the remarks ‘insufficient address’. The relevant extract of evidence in chief dated 05.01.2018 of the Legal Claims Manager of the respondent/Insurance Company [RW-1] filed before the Tribunal is extracted below: “I further state that, in addition to this our 4th respondent insurance company got issued notice U/O 12. Rule 8 CPC through RPAD with due acknowledgement to the 3rd respondent GPA holder to the address given in the charge sheet calling upon him to produce DL of the charge sheeted driver namely Krishna, or furnish particulars of DL before hon’ble court for the fair disposal of the above claim petition but the same has been returned unserved with a sara stating insufficient address.” [Emphasis Supplied] 10. Given the fact that respondent-Insurance Company itself was unable to serve the notices under Order 12 Rule HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 11 of the CPC, their contention that despite service of notice, no driving licence was produced, cannot be sustained. 11. The law on the liability of the Insurance Company in the case of a fake, invalid or non-existent driving licence is no longer res integra. The Supreme Court in the National Insurance Co. Ltd. Vs. Swaran Singh1 case while examining the defence of the insurance company that the offending vehicle was not driven by an authorized person and or a person not having a valid driving licence held that it is obligatory on the part of the Respondent/Insurance Company to substantiate the defence and a mere plea would not suffice. The relevant extract is set out below: “84. We have analysed the relevant provisions of the said Act in terms whereof a motor vehicle must be driven by a person having a driving licence. The owner of a motor vehicle in terms of Section 5 of the Act has a responsibility to see that no vehicle is driven except by a person who does not satisfy the provisions of Section 3 or 4 of the Act. In a case, therefore, where the driver of the vehicle, admittedly, did not hold any licence and the same was allowed consciously to be driven by the owner of the vehicle by such person, the insurer is entitled to succeed in its defence and avoid liability. The matter, however, may be different where a disputed question of fact arises as to whether the driver had a valid licence or where the owner of the vehicle committed a breach of the terms of the contract of insurance as 1 (2004)3 SCC 297 HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 12 also the provisions of the Act by consciously allowing any person to drive a vehicle who did not have a valid driving licence. In a given case, the driver of the vehicle may not have any hand in it at all e.g. a case where an accident takes place owing to a mechanical fault or vis major. (See Jitendra Kumar [(2003) 6 SCC 420 : JT (2003) 5 SC 538]. 88. Section 10 of the Act provides for forms and contents of licences to drive. The licence has to be granted in the prescribed form. Thus, a licence to drive a light motor vehicle would entitle the holder there to drive the vehicle falling within that class or description. 89. Section 3 of the Act casts an obligation on a driver to hold an effective driving licence for the type of vehicle which he intends to drive. Section 10 of the Act enables the Central Government to prescribe forms of driving licences for various categories of vehicles mentioned in sub-section (2) of the said section. The various types of vehicles described for which a driver may obtain a licence for one or more of them are: (a) motorcycle without gear, (b) motorcycle with gear, (c) invalid carriage, (d) light motor vehicle, (e) transport vehicle, (f) road roller, and (g) motor vehicle of other specified description. The definition clause in Section 2 of the Act defines various categories of vehicles which are covered in broad types mentioned in sub-section (2) of Section 10. They are “goods carriage”, “heavy goods vehicle”, “heavy passenger motor vehicle”, “invalid carriage”, “light motor vehicle”, “maxi-cab”, “medium goods vehicle”, “medium passenger motor vehicle”, “motor-cab”, “motorcycle”, “omnibus”, “private service vehicle”, “semi-trailer”, “tourist vehicle”, “tractor”, “trailer” and “transport vehicle”. In claims for compensation for accidents, various kinds of breaches with regard to the conditions of driving licences arise for consideration before the Tribunal as a person possessing a driving licence for “motorcycle without gear”, [sic may be driving a vehicle] for which he has no licence. Cases may also arise where a holder of driving licence for “light motor vehicle” is found to be driving a “maxi-cab”, “motor-cab” or “omnibus” for which he has no licence. In each case, on evidence led before the Tribunal, a decision has to be taken whether the fact of the driver possessing licence for one type of vehicle but found driving another type of vehicle, was the main or contributory cause of accident. If on facts, it is found that HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 13 the accident was caused solely because of some other unforeseen or intervening causes like mechanical failures and similar other causes having no nexus with the driver not possessing requisite type of licence, the insurer will not be allowed to avoid its liability merely for technical breach of conditions concerning driving licence. 90. We have construed and determined the scope of sub-clause (ii) of sub-section (2) of Section 149 of the Act. Minor breaches of licence conditions, such as want of medical fitness certificate, requirement about age of the driver and the like not found to have been the direct cause of the accident, would be treated as minor breaches of inconsequential deviation in the matter of use of vehicles. Such minor and inconsequential deviations with regard to licensing conditions would not constitute sufficient ground to deny the benefit of coverage of insurance to the third parties. 91. On all pleas of breach of licensing conditions taken by the insurer, it would be open to the Tribunal to adjudicate the claim and decide inter se liability of insurer and insured; although where such adjudication is likely to entail undue delay in decision of the claim of the victim, the Tribunal in its discretion may relegate the insurer to seek its remedy of reimbursement from the insured in the civil court. 92. It may be true as has been contended on behalf of the petitioner that a fake or forged licence is as good as no licence but the question herein, as noticed hereinbefore, is whether the insurer must prove that the owner was guilty of the wilful breach of the conditions of the insurance policy or the contract of insurance. In Lehru case [(2003) 3 SCC 338 : 2003 SCC (Cri) 614] the matter has been considered in some detail. We are in general agreement with the approach of the Bench but we intend to point out that the observations made therein must be understood to have been made in the light of the requirements of the law in terms whereof the insurer is to establish wilful breach on the part of the insured and not for the purpose of its disentitlement from raising any defence or for the owners to be absolved from any liability whatsoever. We would be dealing in some detail with this aspect of the matter a little later. HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 14 93. The Motor Vehicles Act, 1988 provides for grant of learner's licence. [See Section 4(3), Section 7(2), Section 10(3) and Section 14.] A learner's licence is, thus, also a licence within the meaning of the provisions of the said Act. It cannot, therefore, be said that when a vehicle is being driven by a learner subject to the conditions mentioned in the licence, he would not be a person who is not “duly licensed” resulting in conferring a right on the insurer to avoid the claim of the third party. It cannot be said that a person holding a learner's licence is not entitled to drive the vehicle. Even if there exists a condition in the contract of insurance that the vehicle cannot be driven by a person holding a learner's licence, the same would run counter to the provisions of Section 149(2) of the said Act. 94. The provisions contained in the said Act provide also for grant of driving licence which is otherwise a learner's licence. Sections 3(2) and 6 of the Act provide for restriction in the matter of grant of driving licence, Section 7 deals with such restrictions on granting of learner's licence. Sections 8 and 9 provide for the manner and conditions for grant of driving licence. Section 15 provides for renewal of driving licence. Learner's licences are granted under the Rules framed by the Central Government or the State Governments in exercise of their rule-making power. Conditions are attached to the learner's licences granted in terms of the statute. A person holding learner's licence would, thus, also come within the purview of “duly licensed” as such a licence is also granted in terms of the provisions of the Act and the Rules framed thereunder. It is now a well-settled principle of law that rules validly framed become part of the statute. Such rules are, therefore, required to be read as a part of the main enactment. It is also a well-settled principle of law that for the interpretation of statute an attempt must be made to give effect to all provisions under the rule. No provision should be considered as surplusage. [Emphasis Supplied] 11.1. The Swaran Singh’s case crystallized these findings by holding that merely stating that the driver of a vehicle HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 15 did not have a licence or had an invalid or fake licence by itself is not enough to avoid liability by an Insurance Company. They must also establish breach on the part of the owner of the vehicle. Unless the breach is so fundamental that it has contributed to the cause of the accident, the Insurance Company cannot avoid its liability. The relevant extract is set out below: “110. The summary of our findings to the various issues as raised in these petitions are as follows: (1) 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) Insurer is entitled to raise a defence in a claim petition filed under Section 163A 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, eg disqualification of driver or invalid driving licence of the driver, as contained in Sub-section (2)(a)(ii) of Section 149, have 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 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 HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 16 condition of the policy regarding use of vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time, (iv) The insurance companies are, 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 where for would be on them. (v) The court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance of the 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 insured unless the said breach or 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 insured under Section 149(2) of the Act. (vii) The question as to whether the owner has taken reasonable care to 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……” [Emphasis Supplied] 12. The Supreme Court in the Swaran Singh's case also while examining the defence of the Insurance Company that the offending vehicle was not driven by an authorized person and/or a person not having a valid driving licence HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 17 held, it is obligatory on the part of the appellant/Insurance Company to substantiate the defence and a mere plea would not suffice. 13. In the present case, the Insurance Company has failed to produce any evidence to show that the driver did not possess a valid licence or that the owner had committed a willful breach of Insurance Policy. 13.1. Thus, to the extent of grant of pay and recovery rights, this Court is unable to agree with the Appellant / Insurance Company. 14. The second dispute is the award of compensation at notional income of Rs.5,000/- per month. Since the award on loss of amenities is on the lower side, this Court deems it apposite to increase the award on loss of amenities to Rs.30,000/-. Thus, the award would have to be recalculated in the following manner: Sl. No Particulars Amount (Rs.) 1 Towards medical and hospitalization expenses 10,583-00 HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 18 2 Towards attendants and nourishment charges 20,000-00 3 Towards pain and suffering 20,000-00 4 Towards conveyance charges 10,000-00 5 Towards the pecuniary loss (bullocks Rs.12,000/- and bullock cart Rs.15,000/-) 27,000-00 6 Towards loss of earnings during the period of treatment (Rs.5000X3 months) 15,000-00 7 Towards loss of earning on account of permanent disability [Rs.5,000x12x9%x15] 81,000-00 8 Towards loss of amenities 30,000-00 Total 2,13,583-00 Compensation awarded by the Tribunal 2,22,783-00 Amount reduced 9,200-00 15. Accordingly, the Court proceeds to pass the following directions: ORDER (i) The appeal is partly allowed. (ii) The Impugned Judgment and Award dated 28.09.2018 in MVC No.39/2010 passed by the learned Addl. District and Sessions Judge, Chamarajanagar is modified to the extent that the appellant/petitioner is entitled to compensation of Rs.2,13,583/- as against HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 19 Rs.2,22,783/- awarded by the Tribunal, along with interest at the rate of 6% per annum from the date of petition till the date of realization. (iii) The remaining portion of the Impugned Award of the Tribunal remains undisturbed. (iv) The Insurance Company shall deposit the compensation with interest at 6% p.a. within a period of eight weeks from the date of receipt of the judgment. (v) The amount in deposit by the Insurance Company before this Court shall be transmitted to the Tribunal within a week. (vi) The Registry is directed to draw the modified Award accordingly. (vii) The Registry is directed transmit a copy of this judgment to the concerned Tribunal, along with its records. HC-KAR NC: 2026:KHC:10163 MFA No. 3369 of 2019 20 (viii) No order as to costs. Sd/- (TARA VITASTA GANJU) JUDGE SNB/KS List No.: 1 Sl No.: 8 Digitally signed by TARA VITASTA GANJU Location: HIGH COURT OF KARNTAKA