- Bookmark
- Share
- CaseIQ
Kashiram Yadav And Another v. Oriental Fire And General Insurance Co. And Others
Factual and Procedural Background
A police constable, while returning home from duty, was fatally injured when he was knocked down by a tractor owned by Appellant 1, Kashiram Yadav, and driven by Appellant 2, Raghuraj Singh. Raghuraj Singh had no driving licence. The deceased constable’s widow and children filed a claim for compensation against the owner, the driver, and the insurer.
The owner contested liability, asserting (i) that he had sold the tractor to a third party and (ii) that at the time of the accident it was being driven by a licensed driver named Gaya Prasad. Both assertions were rejected by the Motor Accidents Claims Tribunal (“the Tribunal”), which found that Raghuraj Singh was the driver and that the accident was caused by his rash and negligent driving. Because the driver was unlicensed, the Tribunal held the owner solely liable and awarded the claimants Rs 96,000 with 12 % interest per annum until realisation. The High Court affirmed the Tribunal’s award. The present appeal is limited to the issue of whether the insurer must indemnify the owner.
Legal Issues Presented
- Whether, under Section 96 of the Motor Vehicles Act, 1939, an insurer is liable to satisfy a compensation award when the insured vehicle was driven by an unlicensed person.
- Whether the ratio in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan (1987 2 SCC 654) absolves the owner from bearing the award when the unlicensed driver was not entrusted with the vehicle by a licensed driver.
Arguments of the Parties
Appellants’ Arguments
- The insurer is liable to pay the compensation amount even though the tractor was driven by an unlicensed driver.
- Reliance was placed on the Supreme Court decision in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan, which purportedly establishes that the insurer must indemnify the insured unless the insured himself is at fault in entrusting the vehicle to an unlicensed person.
The opinion does not contain a detailed account of the insurer’s arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan (1987 2 SCC 654) | The insurer cannot avoid liability unless the insured himself commits a breach by entrusting the vehicle to an unlicensed person. | The Court affirmed the principle but distinguished the present case, noting that the owner failed to show that the tractor had been entrusted to a licensed driver and had raised false defences. Therefore, the protective ratio of Skandia did not apply. |
Court's Reasoning and Analysis
The Court began by examining Section 96 of the Motor Vehicles Act, 1939, which obliges an insurer to satisfy third-party judgments except where a specified policy condition is breached. One such condition (clause (ii)) prohibits the vehicle from being driven by an unlicensed person.
The Court reiterated the law in Skandia: an insurer can avoid liability only if the insured is proved to have committed a breach by entrusting the vehicle to an unlicensed driver. It further clarified that if, without the insured’s knowledge, an unlicensed person meddles with the vehicle, the insurer remains liable.
Applying these principles, the Court observed:
- The owner’s claim that the tractor had been sold was unproved.
- The owner’s assertion that a licensed driver (Gaya Prasad) was at the wheel was proved false.
- No evidence indicated that the tractor was entrusted to a licensed driver on the date of the accident.
Because the breach of the policy condition (use by an unlicensed driver) was attributable to the insured, the statutory defence under Section 96(2)(b)(ii) was available to the insurer. Consequently, the insurer had no obligation to indemnify the owner.
Holding and Implications
The appeal was dismissed.
Direct Implications: The compensation award of Rs 96,000 with 12 % interest remains payable by the owner and driver; the insurer is not liable. The decision applies existing principles and sets no new precedent beyond reaffirming the distinction drawn in Skandia concerning the insured’s fault in breaching policy conditions.
K. Jagannatha Shetty, J.— The question raised in this appeal relates to the liability of the owner of an insured vehicle to pay compensation for the accident caused by negligence of an unlicensed driver.
2. The facts which are now found are these:
A constable while returning home after performing his duties was knocked down by a tractor owned by Appellant 1 — Kashiram Yadav. Appellant 2 — Raghuraj was then driving the tractor. He had no driving licence. The widow of the constable and her children claimed compensation from the appellants and the insurer. The owner resisted the claim contending inter alia that he had already sold the vehicle to a third party and that vehicle was driven by the licensed driver Gaya Prasad at the time of the accident. Both these facts were not established. The Tribunal held that Raghuraj Singh was driving the tractor and the accident took place due to his rash and negligent driving and not due to any fault on the part of the constable. Since Raghuraj Singh had no driving licence, the Tribunal held that the owner of the vehicle alone is liable to pay the compensation. Having reached that conclusion, the Tribunal determined the amount of compensation payable to the claimants. A sum of Rs 96,000 was awarded with the interest at the rate of 12 per cent per annum till realisation. This award of the Tribunal has been affirmed by the High Court.
3. We are not concerned with the quantum of compensation determined by the Tribunal. That question has not been agitated before us. The only contention that was canvassed before us is as to the liability of the insurer to indemnify the owner to satisfy the judgment against him.
4. Section 96 of the Motor Vehicles Act, 1939 imposes duty on the insurer to satisfy judgments against persons insured in respect of third party risks. Sub-section (2) thereof provides exception to the liability of the insurer. Sub-section 2(b) of Section 96 provides that the insurer is not liable to satisfy the judgments against the persons insured if there has been a breach of a specified condition of the policy. One of the conditions of the policy specified under clause (ii) is that the vehicle should not be driven by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining driving licence during the period of disqualification. It is not in dispute that the certificate of insurance concerned in this case contains this condition. If, therefore, there is a breach of this condition, the insurer will not be liable to indemnify the owner.
5. Counsel for the appellants however, submitted that insurer alone would be liable to pay the award amount even though the tractor was not driven by a licensed driver. In support of the contention, he placed reliance on the decision of this Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan (1987) 2 SCC 654. We do not think that that decision has any relevance to the present case. There the facts found were quite different. The vehicle concerned in that case was undisputedly entrusted to the driver who had a valid licence. In transit the driver stopped the vehicle and went to fetch some snacks from the opposite shop leaving the engine on. The ignition key was at the ignition lock and not in the cabin of the truck. The driver had asked the cleaner to take care of the truck. In fact the driver had left the truck in care of the cleaner. The cleaner meddled with the vehicle and caused the accident. The question arose whether the insured (owner) had committed a breach of the condition incorporated in the certificate of insurance since the cleaner operated the vehicle on the fatal occasion without driving licence. This Court expressed the view that it is only when the insured himself entrusted the vehicle to a person who does not hold a driving licence, he could be said to have committed breach of the condition of the policy. It must be established by the Insurance Company that the breach is on the part of the insured. Unless the insured is at fault and is guilty of a breach of the condition, the insurer cannot escape from the obligation to indemnify the insured. It was also observed that when the insured has done everything within his power inasmuch as he has engaged the licensed driver and has placed the vehicle in his charge with the express or implied mandate to drive himself, it cannot be said that the insured is guilty of any breach.
6. We affirm and reiterate the statement of law laid down in the above case. We may also state that without the knowledge of the insured, if by driver's acts or omission others meddle with the vehicle and cause an accident, the insurer would be liable to indemnify the insured. The insurer in such a case cannot take the defence of a breach of the condition in the certificate of insurance.
7. But in the present case, the onus of the insurer has been discharged from the evidence of the insured himself. The insured took a positive defence stating that he was not the owner of the vehicle since he had already sold the same to a third party. This has not been proved. Secondly, he took a defence stating that the vehicle at the relevant time was driven by a licensed driver, Gaya Prasad (PW 2). This was proved to be false. There is no other material even to indicate that the vehicle was entrusted to the licensed driver on the date of the fatal accident. With these distinguishing features in the present case, we do not think that the ratio of the decision in Skandia Insurance Co. Ltd. case (1987) 2 SCC 654 could be called to aid the appellants.
8. In the result, the appeal fails and is dismissed. In the facts and circumstances of the case, we make no order as to costs.
Alert