The insurance company is not relieved of responsibility if it fails to prove that the owner of the vehicle was “aware” that the driver’s license is false: Punjab & Haryana HC

The High Court of Punjab and Haryana ruled that an insurance company cannot be exonerated from its liability to indemnify the third party simply by asserting that the terms of the insurance contract have been breached because the insured vehicle was driven by a person without a valid licence.

The bench comprising Judge Alka Sarin ruled that the insurer must show that the owner/insured knew or noticed that the license was false and that he still authorized this person to drive. He observed,

The appellant insurance company has failed to prove that the insured (owner) was guilty of negligence and failed to exercise due diligence with respect to compliance with the condition of the relative policy to the use of vehicles by a duly licensed or non-disqualified driver to drive at the appropriate time. In this scenario, the appellant insurance company cannot escape its responsibility to pay the indemnity.

The Court noted that the owner of the vehicle appeared on the witness stand and was cross-examined by the insurance company’s attorney. However, no suggestion was made to the owner that he knew the license was fake and that he was aware of it.

He so dismissed the insurance company’s appeal against the award made by the Motor Accident Claims Tribunal, Gurgaon. In addition, it allowed the counterclaims filed by the plaintiff-respondent seeking an improvement in compensation.

The case arose following an accident resulting in the death of a Jalaluddin due to the reckless and negligent driving of the driver of a Maruti van. Based on the pleadings and evidence on file, the Tribunal found that the accident took place due to the reckless and negligent driving of Respondent No. 6, and the claimants were awarded compensation of Rs 1,54,000 / – plus 12% interest. of the driver, owner of the vehicle, and of the insurance company, held jointly and severally liable.

This is the case of the appellant-insurance company that the Tribunal, in granting the indemnity, should have given the appellant-insurance company rights of recovery against the driver who was not the holder of a a valid driver’s license which is not given to the appellant-insurance company. On the other hand, the plaintiff-respondent filed counter-objections seeking to obtain a further increase in the amount of the compensation granted by the Tribunal because, according to them, the Tribunal did not grant future prospects and did not Nor has it awarded amounts under conventional heads as enacted by the Supreme Court in various cases.

After hearing the parties’ competing arguments, the court held that the insurance company had to establish the insured’s default in order to avoid liability to indemnify the insured.

“It must be established by the insurance company that the breach is on the part of the insured and that it is the insured who is guilty of breach of the promise or forgery of the contract. Unless the insured has committed a fault and is guilty of a breach, the insurer cannot avoid the obligation to indemnify the insured and successfully assert that it is exonerated by the fact that the promisor (the insured) has breached his promise. »

With respect to the Appellant’s insurance company claim regarding the fake driver’s license, the Tribunal has previously held that the Appellant was unable to prove that the owner of the offending vehicle was aware of the fake driver’s license. driver’s license and still allowed him to drive. Nor has the appellant insurance company proven negligence or failure to exercise due diligence on the part of the insured (owner). Accordingly, the Court dismissed their appeal as groundless and held that the appellant insurance company cannot absolve itself of its liability to pay the indemnity.

Regarding the cross-objections filed by the plaintiff-respondent, the court considered the amount of compensation awarded which included loss of property, funeral expenses, etc., but nothing was awarded for the prospects which have been disputed by the plaintiff-respondent. as well as a 10% increase on the amounts under the conventional headings.

Counsel for plaintiffs-respondents Nos. 1 to 5 would argue that no amount was awarded for future prospects and furthermore that no consortium of spouses and parents was awarded in accordance with the law enacted by the Supreme Court in National Insurance Co. Ltd. vs. Pranay Sethi and Ors. [2017(16) SCC 680] and Magma General Insurance Co. Ltd Vs. Nanu Ram aka Chuhru Ram & Ors.,[2018(18)CSC130[2018(18)SCC130[2018(18)CSC130[2018(18)SCC130

The Court found that no amount was awarded for future prospects and that the amount awarded under treaty counts is also not in accordance with the law established by the Supreme Court.

On reading the award, the Court noted that no amount had been awarded for future prospects and that the amount awarded under the conventional heads was also not in accordance with the law enacted by the Court. supreme in the affairs of Pranay Sethi (supra) and Magma General Insurance (supra). The applied multiplier is also incorrect.

The deceased in this case was 37 years old and is survived by his wife, three minor children and one adult child. Minor children have their whole lives ahead of them. Their education must be taken care of as well as the living expenses of all applicants,” he remarked.

For the reason mentioned above, the court dismissed the insurance company’s appeal and upheld the cross-objections filed by the plaintiff-respondent by modifying the award rendered by the Court.

The increased amount of compensation will attract interest at 9% per annum from the date of the claim to the date of payment. Since all Plaintiffs-Respondents Nos. 1 to 5 would henceforth be adults, they would all be entitled to equal shares of the amount of the increased compensation without it being kept in an FDR.

Case Title: National India Insurance Co. Ltd. against Smt. Fajari and others

Citation: 2022 LiveLaw (PH) 68

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Justin D. O'Neill