Case Note & Summary
The National Insurance Company appealed against the judgment and award of the Motor Accident Claims Tribunal, Panaji, which had granted compensation of Rs.1 lakh to the mother of the deceased in a road traffic accident. The accident occurred on 2 September 1994 when the deceased, riding a bicycle, was struck by a scooter driven by Joaquim Pereira. The claimant, the mother, filed a claim petition alleging rashness and negligence on the part of the scooter driver. The driver and owner contested. The insurer, as respondent no.3 in the Tribunal, took the defence that the driver did not hold a valid driving licence to drive a motorcycle, thereby breaching the insurance policy conditions. The Tribunal, however, held that the insurer had failed to prove such breach and fastened liability on the insurer. On appeal, the insurer contended that the Tribunal erroneously concluded that the driver could have held a licence from any other State, ignoring the clear evidence of the Transport Department that the driver only had a light motor vehicle licence. The High Court examined the evidence and noted that the insurer examined a Transport Department official who stated that Joaquim Pereira held a licence for light motor vehicles only, not for two-wheelers. The driver did not challenge this testimony nor produce any licence from any other authority. The Court held that the insurer had discharged the burden of proving breach of policy condition under Section 149(2) of the Motor Vehicles Act, 1988, and absolved the insurer from direct liability. However, invoking the principle of protecting third-party victims, the Court directed the insurer to first pay the compensation to the claimant and then recover the amount from the owner and driver, following the precedent in United India Insurance Co. Ltd. v. Sindhubai Kondiram Darwante. The appeal was partly allowed, the award was set aside to the extent of direct liability, but the pay-and-recover direction was issued.
Headnote
A) Motor Vehicle Insurance - Breach of Policy - Driving Licence - Motor Vehicles Act, 1988, Sections 3(2), 4(3), 10(2), 149(2) - The insurer adduced evidence from the Transport Department proving that the driver held only a light motor vehicle licence, not a motorcycle licence. The driver failed to produce any licence from any other State. Held: The insurer discharged its burden to prove breach of policy condition; the Tribunal's inference that the driver could hold a licence from another State was misplaced. The insurer is absolved from direct liability. (Paras 7-9) B) Motor Vehicle Insurance - Pay and Recover Principle - Motor Vehicles Act, 1988, Sections 145, 147, 149 - In a third-party claim, even where breach of policy is established, the Tribunal/High Court may direct the insurer to first pay compensation and then recover from the insured/driver, exercising inherent powers to protect the claimant. Held: Following United India Insurance Co. Ltd. v. Sindhubai Kondiram Darwante, the insurer shall pay the compensation to the claimant and recover from the owner and driver. (Paras 10)
Issue of Consideration
Whether the appellant insurer established breach of policy on the ground that the driver did not possess a valid driving licence for a two-wheeler; Whether the insurer could be directed to pay compensation to the third-party claimant and recover from the owner and driver despite such breach
Final Decision
Appeal partly allowed. The finding that insurer failed to prove breach of policy is set aside; insurer is absolved from direct liability. However, to protect the third-party claimant, the insurer is directed to first pay the compensation amount to the claimant and then recover the same from the owner and driver (respondents 2 and 3). No order as to costs.
Law Points
- Insurer establishes breach of policy condition if driver had no valid licence for vehicle class
- burden shifts to insured to prove otherwise
- pay-and-recover principle applied for third-party claims
- inherent power of Tribunal to direct insurer to pay and recover
