Insurer Must Show Negligence & Lack Of Reasonable Care By Insured To Avoid Its Liability Under Motor Vehicles Act: J&K&L High Court

The Jammu and Kashmir and Ladakh High Court recently ruled that under the Motor Vehicles Act, mere absence, fake or invalid driving licence or disqualification of driver to drive at the relevant time are not in themselves defences available to the insurer against either insured or third parties. To avoid liability towards insured, the insurer has to prove that insured was guilty of negligence and failed to exercise reasonable care.

A bench comprising Justice Vinod Chaterjee Koul was hearing a review of judgement passed by a coordinate bench of the Court in an Appeal. Perusal of the record revealed that Claimant who had faced injuries as a result of an accident had sought compensation to the amount of Rs.40 Lakhs before the Motor Accident Claims Tribunal, Anantnag. The Insurance Co had resisted the claim petition before the Tribunal on the ground that the driver of offending vehicle was not holding valid and effective driving licence and without PSV endorsement thereon.

By virtue of an award, the Tribunal found claimant entitled to compensation in the amount Rs.4,13,000/- along with 6% interest per annum from the date of institution of claim till realization. Aggrieved of the said award, the Insurance Company filed an appeal which came to be allowed by a coordinate bench of the High Court , granting a right of recovery to Insurance Company. It was this order of which review was being sought.

The counsel for review petitioners argued that the High Court while passing the impugned judgement had not looked into the fact that the tribunal had lucidly dealt with all aspects of the matter, including one the driving licence inasmuch as the Tribunal had referred to law laid down in National Insurance Co. Ltd v. Swaran Singh and others (2004).

Counsel for the review-petitioners further asserted that since the judgement/order does not effectively deal with and determine the important points as were popping up in view of law laid down in certain supreme court judgements relied upon by review petitioner and referred to by the Tribunal, the omission appears on the face of the judgement/order, which would well be reviewed.

Contesting the petition counsel for appellant-Insurance Company stated that the High Court has rightly given the right to Insurance Company to recover the award amount from owner of offending vehicle. He also submitted that driver of the offending vehicle was not having effective driving licence to drive mini passenger bus at the time of accident as there was no PSV endorsement on his driving licence

Adjudicating upon the matter the bench observed that law is trite on the matter that a holder of driving licence with respect to light motor vehicle is competent to drive any light motor vehicle used or adapted to be used for carriage of passengers, i.e., a public service vehicle. Motor Vehicles Act does not prescribe bearing the endorsement of PSV (Passenger Service Vehicle) on a licence for driving light motor vehicle, the bench underscored.

Examining the matter in detail the bench placed reliance on the supreme court judgement in National Insurance Company Ltd v. Swaran Singh and others (2004) wherein SC held that insurance of vehicles against third party risks, as provided under Chapter XI of the Motor Vehicles Act, 1988, is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles and that 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.

With a view to avoid their liability, the insurance companies must not only establish the available defence(s) raised in the proceedings but must also establish breach on the part of owner of the vehicle and that the burden of proof wherefore would be on them. Even where the insurer is able to prove breach on the part of insured as regards policy condition concerning holding of a valid licence by driver or his qualification to drive during 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 accident, the bench underscored.

Dealing with the contention that driver of the offending vehicle was not having effective driving licence to drive mini passenger bus at the time of accident the bench while placing reliance on Mukund Dewangan v. Oriental Insurance Company Limited reported in AIR 2017 observed that a person holding driving licence to drive light motor vehicle can ply the transport vehicle as well of such class and no separate endorsement to that effect is required.

Instant review petition was thus allowed and and the right given to Insurance Company to recover the compensation from the owner was deleted from the judgement.

Case Title: National Insurance Co Ltd Vs Mushtaq Ahmad Kutary

Citation: 2022 LiveLaw (JKL) 118

Click Here To Read/Download Judgment