The New India Assurance Co Ltd v. Surinder Nijhawan

1. These appeals impugn the award of compensation dated 16.07.2016, passed by the learned MACT in Suit Nos. 305/11, 307/11, 308/11, 309/11, 306/11, 310/11, 21/16 and 190/11, 191/11, 192/11, 193/11, 194/11, 195/11, 196/11, 279/11, 280/11, 322/11, 323/11, 324/11, 325/11, 326/11,457/11, 257/11, 259/11, 260/11, 456/11, 657/11, 658/11 & 390/11, on the ground that the right of recovery against the owner and driver of the vehicle has not been granted. The quantum of compensation has not been challenged. Indeed the compensation stands duly paid to the claimants.

2. A passenger bus packed to the capacity, was carrying passengers who in pious fervour, were on a pilgrimage from Delhi to Katra. Closer to the destination, when the bus entered hilly areas, it slipped into a ravine, resulting in the death of 13 passengers and serious injuries to 24 others.

3. The accident occurred on 20.06.2007. Almost a decade later, by an Award dated 16.07.2016, the learned Tribunal awarded the compensation to the victims. However, it declined rights of recovery to the insurer on the ground that the owner of the vehicle had proven that, he had engaged the driver of the vehicle after having duly satisfied himself, that the licence shown to him by the driver appeared to be valid and that the driver possessed requisite skills to drive the said insured vehicle.

4. The learned Tribunal had relied upon various judicial precedents, including National Insurance Company Ltd. vs. Anjana Shyam & Ors. IV (2007) ACC 355 (SC); MAC APP. 172/2011; National Insurance Co. Ltd. MAC.APP.821, 822, 823, 824, 825, 826, 827, 828, 829, 832, 833, 834, 835, 836, 837, 838, 839, 840, 841, v. Prakash Chand & Ors. decided on 9th January, 2015; Sardari & Ors. v. Sushil Kumar & Ors., II (2008) ACC 426 (SC); New India Assurance Co. Ltd. v. Kusum & Ors., II (2010) ACC 518 (SC) and United India Insurance Co. ltd. v. Sujata Arora and Others, 2013 ACJ 2129.

5. The insurer had contended that, in the first instance the driving licence was fake. Secondly, that it did not bear the requisite endorsement from the relevant Transport Authority, to the effect that the driver could drive a passenger bus or any vehicle in hill areas, in terms of the requirement in Rule 185 (d) of the Himachal Pradesh Motor Vehicles Rules, 1999. The said Rule stipulates that the driver shall not drive a public service vehicle on any hill road, unless the driving licence has been enclosed for driving on hill roads by the Registering Authority. An Explanation to the said Rule is to the effect that, hill roads shall mean all roads of the State except those roads which may be excluded by the Government by a specific notification in the official Gazette.

6. The learned counsel for the insurance company submits that the legal requirement is specific for driving of vehicles in Himachal Pradesh, where the unfortunate accident occurred; that this requirement has been made mandatory because the skills for driving a vehicle in hill areas are of a separate kind, and such endorsement is only to ensure that the driver possesses the requisite skills so as to prevent any accident.

7. To a query put by the Court to the learned counsel for the appellant as to whether the endorsement for driving in hill areas is preceded by any trial or test by the relevant Transport Authority, the answer is that she will need to check it up. The rules are silent in this regard. No specific test has been prescribed nor is there any procedure laid down whereunder such test would MAC.APP.821, 822, 823, 824, 825, 826, 827, 828, 829, 832, 833, 834, 835, 836, 837, 838, 839, 840, 841, be undertaken by the relevant Transport Authority, to test the skills of the driver to drive in the hill areas.

8. The learned Tribunal has referred to the decision of the Supreme Court in Lakhmi Chand vs. Reliance General Insurance, (2016) 3 SCC 100, decided on 07.01.2016, which examined the issue as to, whether merely carrying more passengers than the permitted capacity in terms of the policy, at the time of the accident, was so fundamental that it amounted to breach of policy conditions, so as to allow the insurer to eschew its liability for damage caused to or by the vehicle. In the aforesaid judgment reference was made to B.V. Nagaraju vs. Oriental Insurance Co. Ltd., (1996) 4 SCC 647, in which the said contention was rejected for the reason that the insurer had failed to show as to how the excess number of passengers had contributed to the causation of the accident. Therefore, merely because there were such additional number of passengers, it would not by itself be considered as a fundamental breach of the policy conditions. Furthermore, it referred to its dicta in National Insurance Co. Ltd. vs. Swaran Singh & Ors., (2004) 3 SCC 297, wherein a three-Judges Bench of the Supreme Court had held, that the insurer himself shall not only show that the insured vehicle caused or was permitted to be used in breach of the policy but also that the damage which was suffered, flowed from such breach. It further held as under: “ (iii)...... 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…...

(iv) Insurance companies, however, with a view to avoid their liability must not only establish the available MAC.APP.821, 822, 823, 824, 825, 826, 827, 828, 829, 832, 833, 834, 835, 836, 837, 838, 839, 840, 841, 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 wherefor would be on them.

(v) The court cannot lay down any criteria as to how the said burden would be discharged, inasmuch as the same would depend upon the facts and circumstances of each 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 the 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……..”

9. Lakhmi Chand (supra) held that the insurer had failed to produce any evidence to prove that the accident occurred on account of overloading of passengers. Referring to B.V. Nagaraju (supra), it held that the policy would not come to an end unless the insurer was able to show that the breach was fundamental in nature. The Court found that the accident had occurred on account of rash and negligent driving of the offending insured vehicle.

10. In Mukund Dewangan vs. Oriental Insurance Co. Ltd., 2017 14 SCC 663, a three-Judges Bench of the Supreme Court held inter-alia, that the person holding a valid driving licence to drive the motor vehicles classified as Light Motor Vehicles under section 10 (2) (d) of the Motor Vehicles Act, 1988, whose weight does not exceed 7,500 kg, is competent to drive a transport vehicle or omnibus, motor car, a tractor or a road roller, provided the unladen weight of the said vehicle does not exceed 7,500 kg. It held that MAC.APP.821, 822, 823, 824, 825, 826, 827, 828, 829, 832, 833, 834, 835, 836, 837, 838, 839, 840, 841, no separate endorsement on the licence is required to drive a transport vehicle of LMV class. It held inter alia: “30. The State Government has to maintain a register of motor vehicles under Rule 75 as provided in Form 41 which includes gross vehicle weight, unladen weight, etc. The Central Government has the power to frame rules under Section 27, inter alia, regarding minimum qualification, forms, and contents of the licences, etc. Thus, we are of the considered opinion that the definition of “light motor vehicle” under Section 2(21) of the Act includes transport vehicle of the class and weight defined therein. The transport vehicle or omnibus would be light motor vehicle, gross vehicle weight of which, and also a motor car or tractor or roadroller, unladen weight of which, does not exceed 7500 kg, and can be driven by holder of licence to drive light motor vehicle and no separate endorsement is required to drive such transport vehicle.

31. It is a settled proposition of law that while interpreting a legislative provision, the intention of the legislature, motive and the philosophy of the relevant provisions, the goals to be achieved by enacting the same, have to be taken into consideration.”

11. In this appeal, the Rule being examined is Rule 185 (D) of the Himachal Pradesh Road Transport Vehicles Rules, 1999, which reads as under: “185. Special provisions on hill roads:- On all hill roads all drivers shall observe the following special rule namely:- (a) no motor vehicle shall overtake another, except at a place where the whole road is clearly visible for at least 180 metres ahead; (b) when two motor vehicles approach each other in opposite directions at a point where they cannot meet without danger of collusion, the vehicle proceeding down hill shall give way to the vehicle proceeding uphill and MAC.APP.821, 822, 823, 824, 825, 826, 827, 828, 829, 832, 833, 834, 835, 836, 837, 838, 839, 840, 841, when such a meeting takes places in a dip or on a level stretch of road, the vehicle on the inside of the road, that, the side from which the hill side slopes upwards, shall give way;