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United India Fire & General Insurance Co. Ltd. By Its Manager v. Rum. Nagarathna, & 2 Others
Summary of the Court Opinion
Factual and Procedural Background
This appeal was brought by the Insurance Company against the judgment and award dated 3rd December, 1979, of the Motor Accidents Claims Tribunal, Bangalore City, in M.C. (MVC) No. 60 of 1979. The Tribunal had awarded compensation of Rs. 20,519.05 against the respondents and directed the Insurance Company to pay the award with costs and interest.
The Insurance Company pleaded that the insured scooter was at the relevant time driven by a person who did not hold a valid driving licence and therefore argued it was not liable under the policy. A witness for the Insurance Company (R.W.1 Narayan) produced documents marked Exts. R.1 to R.3, relied upon to show that the driver had no driving licence on the date of the accident. The claimant supported the Tribunal's award. The central procedural issue before the court was whether the Tribunal was justified in holding that the Insurance Company was liable to indemnify the owner by paying the compensation awarded, despite the insurer's plea regarding lack of a valid driving licence.
Legal Issues Presented
- Whether the Tribunal was justified in holding that the Insurance Company was liable to indemnify the owner by paying the compensation awarded, despite the insurer's plea that the vehicle was driven by an unlicensed person.
- Who bears the burden of proof to establish a breach of a policy condition excluding liability where the insurer pleads that the vehicle was driven by a person not duly licensed (i.e., whether the insurer must prove the lack of licence).
Arguments of the Parties
Appellant (Insurance Company) — Arguments
- The Insurance Company specifically pleaded that the scooter was not driven at the relevant time by a person holding a valid driving licence and therefore it was not liable to indemnify the owner.
- R.W.1 produced Exts. R.1 to R.3, which the insurer relied on: Ext. R.1 was a copy of the policy showing the condition, Ext. R.2 was a certified copy of the order sheet in the criminal case against the driver, and Ext. R.3 was the plea recorded of the driver; these were said to prima facie establish that the driver had no driving licence on the date of the accident.
- The insurer contended that, because the owner did not produce a driving licence for the driver, the insurer was not liable to indemnify.
Respondent (Claimant) — Arguments
- The claimant supported the Tribunal's judgment and award.
- The claimant's counsel contended that Ext. R.3 (the plea of the accused recorded in the criminal court) did not amount to an admission that the driver had no driving licence on the date of the accident.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Jogindra Kuer v. Jagadish Singh (Patna High Court) | Where an insurer pleads that the driver was not duly licensed or was disqualified, the onus lies upon the insurer to establish that allegation. | The court cited this decision to support the proposition that the insurer must satisfactorily prove absence of licence or disqualification; the insurer in that case failed to do so. |
| Indian Mutual Insurance Company v. The United India Fire and General Insurance Co. Ltd. (Andhra Pradesh High Court) | The burden of proving satisfactorily that the driver had no licence on the date of the accident is on the Insurance Company; insurer must take effective steps (e.g., examine RTO, produce licence). | The court relied on this reasoning, including the observation that the insurer did not call RTO or produce the licence and merely issued a notice to produce the driver — steps which were inadequate to discharge the burden. |
| Anand Insurance Co. Ltd. v. Hasanali (Madhya Pradesh High Court) | Held (in that decision) that the burden of proof is on the driver to produce the licence and not on the Insurance Company. | The court explicitly disagreed with this view and declined to follow it, noting the preponderance of authority to the contrary. |
| Ruby General Insurance Co. Ltd. v. Kestarbai (Madhya Pradesh High Court) | A later Madhya Pradesh decision distinguishing Anand Insurance and holding that the insurer bears the burden to prove breach of policy conditions. | The court cited this later decision as support for the proposition that the insurer, not the claimant or owner, has the onus to prove breach of policy conditions. |
| Sanjiv Shetty v. Anantba | Held that the onus of establishing that the owner violated the policy term prohibiting driving by an unlicensed or unauthorized person is on the insurer. | The court referenced this case among authorities reiterating that the insurer carries the onus of proof. |
| M. Subramanya Bhat v. Govindaraju | Reiterated the proposition that the onus of proving breach of the policy condition is on the insurer. | The court relied on this case as further support for placing the burden on the insurer. |
| Bishan Devi v. Sirbaksh Singh (Supreme Court) | Under Section 96(2)(b)(ii) the insurer can defend on the ground of driving by an unlicensed person, but it is the insurer's duty to have substantiated the plea — insurer must take steps to establish the allegation. | The court cited this authoritative Supreme Court decision (including the quoted observation of Justice Kailasam) to reinforce that an insurer must substantiate its plea; the insurer in the present appeal had not done so satisfactorily. |
Court's Reasoning and Analysis
The court began its analysis by referring to Section 96(2) of the Motor Vehicles Act, 1939, which enumerates defences available to an insurer in a compensation action, including a condition excluding driving by persons not duly licensed. The court stated the legal proposition, supported by several High Court and Supreme Court decisions, that the burden of proving any breach of such a policy condition rests on the Insurance Company.
The court then examined the evidence produced by the insurer: Ext. R.1 (copy of the policy containing the condition), Ext. R.2 (certified copy of the order sheet in the criminal case against the driver), and Ext. R.3 (the plea recorded of the driver in the criminal court). The insurer relied mainly on Exts. R.2 and R.3 to show that the driver had admitted to having no driving licence on the date of the accident.
The court analysed Ext. R.3 carefully and identified several defects in the method of recording the plea by the Magistrate: multiple allegations were put in a single sentence and one question was asked in relation to multiple alleged offences, which made the plea confusing and legally defective. The court noted it was unclear whether any admission related to any specific allegation and observed there was no endorsement showing the plea was explained to the accused in Kannada (the accused's language). On this basis, the court concluded that Ext. R.3 did not constitute a clear admission by the driver that he had no driving licence on the date of the accident.
Beyond the deficiencies in the plea, the court observed that the Insurance Company produced nothing else to show the driver lacked a licence. The court emphasised that the insurer could — and should — have taken several concrete steps to discharge the burden: summon the driver to produce the licence, summon the Regional Transport Officer (R.T.O.) to produce the relevant licence, or produce a certified copy or R.T.O. endorsement that no licence existed. The court referenced prior authority (including the Andhra Pradesh decision) to show these are recognized means for an insurer to substantiate its plea.
The court rejected the insurer's submission that the burden lay on the driver or that the negative nature of the burden absolved the insurer from taking further steps. It noted the existence of a contrary Madhya Pradesh decision (Anand Insurance Co. Ltd. v. Hasanali) but expressly disagreed with that view, relying instead on later Madhya Pradesh authority (Ruby General Insurance Co. Ltd. v. Kestarbai) and multiple other decisions culminating in the Supreme Court's ruling in Bishan Devi v. Sirbaksh Singh that the insurer must substantiate the plea.
On appreciating the entire evidence, and in light of the defective plea and the insurer's failure to summon the driver or the R.T.O. or otherwise produce satisfactory proof that the driver had no licence, the court concluded that the Insurance Company had failed to establish satisfactorily that the driver of the scooter had no driving licence on the date of the accident.
Holding and Implications
Holding: The appeal by the Insurance Company is dismissed. The Tribunal's judgment and award of 3rd December, 1979, directing the Insurance Company to pay the compensation of Rs. 20,519.05 (with costs and interest as awarded) is affirmed.
Implications:
- The direct effect is that the Insurance Company remains liable to indemnify the owner by paying the compensation awarded by the Tribunal.
- The court made no order as to costs on the peculiar circumstances of the case.
- The opinion reiterates and applies settled authority that an insurer who pleads breach of a policy condition (such as driving by an unlicensed person) must plead and prove that breach by taking effective steps (for example, summoning the driver or the R.T.O. or producing certified documents). The court expressly declined to follow an earlier divergent Madhya Pradesh decision on the point and relied upon subsequent and higher authority to place the burden on the insurer. The opinion does not purport to establish a new legal principle beyond applying the cited authorities to the facts of this case.
This summary is confined strictly to the material contained in the provided opinion and does not add or infer facts not present in the source text.
Sabhahit, J.:— This appeal by the Insurance Company is directed against the judgment and award dated 3rd December, 1979. Made by the Motor Accidents Claims Tribunal, Bangalore City, in M.C (MVC) No. 60 of 1979, on its file, awarding compensation of Rs. 20,519-05 against the respondents and directing the Insurance Company to pay the same along with costs and interest.
2. The learned Advocate appearing for the Insurance Company vehemently contended that in the instant case the Insurance Company took a specific plea that the Company was not liable because the vehicle viz., the Scooter in question, was not driven at the relevant time by a person holding valid driving licence. He further submitted that R.W 1 Narayan got marked Exts. R. 1 to R. 3 which prima facie establish that the driver had no driving licence on the date of the accident. Thus according to him, the Insurance Company established prima facie that the driver had no driving licence on that day. It was for the owner to produce the driving licence, if the driver had any either before the date of accident or on the date of accident. He having not done so, it was submitted that the Company was not liable to indemnify the owner by paying the compensation.
3. As against that, the learned Advocate appearing for the claimant argued supporting the judgment and award of the Tribunal.
4. The sole point, therefore, that arises for our consideration in this appeal is, whether the Tribunal was justified in holding that the Insurance Company was liable to indemnify the owner by paying the compensation awarded in the case along with costs and interest.
5. Section 96(2) of the Motor Vehicles Act, 1939, speaks of defences that can be raised by the Insurance Company in an action for compensation; inter alia, one of the defences available is, that there has been breach of a special condition of the policy, being one of the following conditions, namely:
(i) … … …
(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification;
(iii) … … …
6. Thus the learned Counsel for the appellant submitted that one of the conditions incorporated in the policy was that the vehicle should be driven by a person holding a valid driving licence or by any person who has not been disqualified for holding or obtaining a driving licence he having held the licence.
7. It is uniformly held by different High Courts in India including our own that the burden of establishing any breach of condition in the policy is on the Insurance Company.
In the case of Jogindra Kuer v. Jagadish Singh(1) it is laid down by a Division Bench of the Patna High Court that where the Insurance Company takes the plea with regard to breach of the terms of the policy, contending that the driver of the insured vehicle was not duly licensed or was disqualified for holding or obtaining a licence, the onus lies upon the Company to establish its allegations. It was held in that case that the Company did not satisfactorily prove that the driver had no driving licence or was disqualified on the date of accident or that there was any breach of condition of the policy in this respect.
In a recent decision in the case of Indian Mutual Insurance Company v. The United India Fire and General Insurance Co. Ltd.(2). It is laid down by the Andhra Pradesh High Court that the burden of proving satisfactorily that the driver had no licence to drive the date of the accident is on the Insurance Company. His Lordship has observed:
“The Insurance Company, however, did not, choose to examine any one from the Regional Transport Officer's Office, nor did it choose to call for the production of the licence issued to the 3rd respondent. It merely got a notice, Ex. B-2 issued to the 2nd respondent to produce the driver in Court to give evidence. This step taken by the 4th respondent is of no avail, for the 2nd respondent himself denies that he was the owner of the vehicle and that he had authorised the 3rd respondent to drive the vehicle. In response to the 4th respondent's notice, the 2nd respondent therefore, could not be expected to produce the 3rd respondent for being examined as a witness. It was not within the power of the 2nd respondent to produce the 3rd respondent as a witness in the case. In any event, on this account, no inference adverse to the petitioner's interest could be drawn. The 4th respondent ought to have taken effective steps to examine the driver.”
Thus it can be safely laid down that it is for the Insurance Company to plead and prove breach of any condition in the policy which exempts it from indemnifying the owner, and enables it to deny liability to third party claim.
8. In the instant case, it is no doubt true that the learned Advocate appearing for the appellant Insurance Company submitted that R.W 1, a witness examined on behalf of the Insurance Company got marked Exts. R. 1 to R. 3. Ext. R. 1 is a copy of the policy which contains the condition. Ext. R. 2 is the Certified copy of the Order Sheet in Criminal Case 2471/] 978 lodged against the driver of the scooter in question. Ext. R 3 is the plea recorded of the driver. It is mainly on Exts. R. 2 and R. 3 that the learned Advocate relied; to show that the driver admitted before the Criminal Court that he had no driving licence on the date of the accident.
9. The learned Advocate appearing for the respondent-claimant, however, submitted that Ext. R. 3 the plea of the accused would not amount to an admission that he had no driving licence on the date of the accident.
10. In order to appreciate the rival contentions, it is necessary to read Ext. R. 1, the plea recorded by the Criminal Court:
“The allegations against you is that on 21-8-1978 at about 17-20 Hours you being the rider of scooter No. MYL. 9356-rode the same along S.C Road near Kino Talkies, from South to North in a manner so rash or negligent as to endanger human life or personal safety of others, dashed the same against a pedestrian C.W 3 Kumari Nagarathna, as a result of which the said girl fell down and sustained grievous injuries on her person, which is an offence u/s. 279 and 338 of the Indian Penal Code.
Further you rode the said vehicle without having a valid driving licence which is also an offence u/s. 3(1) r/w Section 112 of the Indian Motor Vehicles Act.
Do you plead guilty or have you any defence to make?
11. It may at once be noted that the manner of recording the plea by the learned Magistrate is not in aceordence with the law and the rulings laid down in that behalf by this Court. He must put one allegation and elicit answer thereon. If he goes on putting several allegations and asks one question, it may not amount to recording a plea legally at all. It is confusing and con-founding and the one sentence would be vague and nebulous. It is not understood whether that admission refers to first plea, or second plea or 3rd plea. This Court has deprecated recording of plea in that manner in cases more than once: Besides, when we read the plea it is not known whether the plea was explained to the accused in Kannada as the answer is taken down in Kannada the language of the accused; there is no endorsement to that effect. Therefore, we are constrained to observe that we are unable to bring ourselves to agree with the submission made by the learned Counsel that the plea is a complete admission of the driver that he had no driving licence. On the other hand, as explained above, it is no admission at all of the driver that he had no driving licence. Apart from this, the Certified Copy of the plea in the Criminal Court produced at Ext. R. 3, there is nothing else produced by the Insurance Company to show that the driver on that, day had no driving licence. As pointed out in the afore cited Andhrapradesh decision, it was for the Insurance. Company to summon the driver. That the driver had not stepped into the box cannot in any way prejudice the claim of the petitioner who has suffered the injuries. The Company has not taken any steps to summon the driver to come with the licence. The Insurance Company could have again summoned the R.T.O to produce the relevant licence, if any, or at any rate, produced the certified copy of the licence from the R.T.O's Office, or an endorsement from the R.T.O that the driver had no licence. This, we observe because, the learned Counsel for the appellant submitted that the burden is of a negative nature. We are only pointing out the various ways by which the Insurance Company could have proved that the driver had no licence on the date of the accident.
12. The learned Advocate appearing for the appellant however invited our attention to a decision of Madhya Pradesh High Court in the case of The Anand Insurance Company Ltd. v. Hasanali(3) wherein it is laid down that the burden of proof is on the driver to produce the licence before the Court and not on the Insurance Company and as such no liability can be fastened on the insurance Company. With great respect to their Lordships of the Madhya Pradesh High Court, we are unable to agree with the view. The preponderance of authority of different High Courts is in favour of the proposition that the burden is on the Insurance Company to prove any breach in the policy in order to get an exemption from liability.
Moreover, the High Court of Madhya Pradesh in a later decision in the case of Ruby General Insurance Co. Ltd. v. Kestarbai(4) has distinguished and differed from its earlier ruling rendered in the aforesaid case of Ananda Insurance Co. Ltd., and has held that the burden to prove any breach of condition in the policy is on the Insurance Company. This Court has held in the case of Sanjiv Shetty v. Anantba(5) that the onus of establishing that the owner of the insured vehicle has violated the term of the policy prohibiting the driving of the vehicle by an unlicensed or unauthorised person is on the insurer. The proposition is reiterated in M. Subramanya Bhat v. Govindaraju.(6) Hence, we have no hesitation to hold that the onus of proving any breach of condition in the policy is on the insurer and not on the claimant or owner of the vehicle. We are further supported in our view by a recent authoritative decision of the Supreme Court in the case, Bishan Devi v. Sirbaksh Singh.(7) wherein His Lordship Justice Kailasam who spoke for the Bench has observed:
“Under Sec. 96(2)(b)(ii) the insurer can defend a claim for compensation on the ground that the vehicle was driven by a person who was not duly licensed. Apart from making the averment in his written statement the insurer did not take any steps to establish that the vehicle was driven by a person who was not properly licensed……It is the duty of the insurer to have substantiated the plea…..”
On an appreciation of the entire evidence placed before the Court, we are satisfied that the Insurance Company has failed to establish satisfactorily that the driver of the scooter had no driving licence on the date of the accident.
13. In the result, therefore, the appeal fails and is dismissed.
14. On the peculiar circumstances of the case, we make no order as to costs.
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