Insurance Company Not Liable To Indemnify Award When Driver Of Offending Vehicle Did Not Have Valid License : Gujarat High Court

An insurance company cannot be held liable for indemnity if the driver of the offending vehicle does not have a valid license on the date of the accident, Gujarat High Court has held. In an appeal filed against an order of Motor Accident Claims Tribunal which had held that the insurance company would be liable to indemnify an award for accidental damage even if the license of the person driving the offending vehicle had expired, Justice RM Chayya, overturned the award of the Tribunal. It stated that in absence of any valid license, the insurance company must be exonerated from the liability of payment of indemnity. Background In the instant case, the Opponent, while riding his motorcycle collided with the Respondent-Claimant who was walking on the road. The Claimant suffered serious injuries and as a result, an FIR was registered under Section 166(1) of the Motor Vehicles Act, 1988. The Claimant claimed compensation worth INR 3 lakhs at the Motor Accident Claims Tribunal. However, the Insurance Company contended that the driver of the offending vehicle did not possess any license. The Tribunal also noted that the license issued to the Opponent was for a light motor vehicle in 1992 and for an auto-rickshaw in 1987, that expired in 2008. However, the accident occurred in 2009 more than one year from the expiry of the validity of the license. Yet, the Tribunal adjudged that the license was not cancelled and held the Insurance Company to be liable to indemnify the award. After examining the evidence, the Tribunal awarded a sum of INR 88,300 with 7.5% interest from the date of filing of the claim petition till its realisation to the Claimant. The aggrieved Appellant-Company filed the present appeal and averred that the Tribunal has committed an error in disregarding the fact that the Opponent did not hold a valid license on the date of the accident. Per Contra, the Respondent-Claimant claimed that even though there was no valid or substantive license on the date of the accident, the Court/tribunal could still pass an order of pay and recover and the Appellant could be directed to pay first and then recover the sum later and thus, the small amount of INR 88,300 was just and adequate as per the Respondent for the injuries sustained. Judgement The Court considered the Mahmad Rafik Munnebhai Ansari judgement which was relied on by the Appellant-Company and observed that: "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 Bench then turned to V Mepherson vs Shiv Charan Singh, [1998 ACJ 601 (Del.)] where the owner of the vehicle was held not guilty of violating the condition of policy by wilfully permitting his son to drive the car who had no license at the time of the accident. In that case, the owner and the insurer were held jointly and severally liable. The Ansari judgement had also observed that even though the Insurance Company need not indemnify the Claimant in a case where the offender did not possess the driving license on the date of the accident, the Claimant would be at liberty to proceed against the owner of the vehicle to recover the compensation. Justice Chhaya observed that it was clear as per the Motor Vehicles Act that leverage of 30 days is granted in the event the license expires but in the instant case, one year had passed and yet the same was not renewed. The Judge further iterated that the position taken by the Ansari judgement, in this regard, is the settled position of law and thus, the Opponent Nos. 1 and 2 were held to be jointly and severally liable to satisfy the award while the Appellant-Company was exonerated from the same. Noting that the Insurance Company had deposited the whole amount with interest and yet the same was not disbursed in favour of the Claimant, the Bench held that the interest may be disbursed in favour of the Claimant but the rest of the amount should be refunded back. Accordingly, the Appeal was allowed partially, and the order of the Tribunal was quashed.Also Read: Insurer Liable To Indemnify Compensation To Third Party In Case Of Breach Of Policy Conditions, May Recover From Insured Later: Rajasthan High Court Case Title: National Insurance Company Ltd vs Bharatbhai Bhimjibhai Songara and Ors Case No.: C/FA/2180/2012 Citation: 2022 LiveLaw (Guj) 12 Click Here To Read/Download Judgment

Insurance Company Not Liable To Indemnify Award When Driver Of Offending Vehicle Did Not Have Valid License : Gujarat High Court

PRIYANKA PREET

Tags