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National Insurance Co.Ltd vs J.Maheshwaramma

Supreme Court8 May 2009Asok Kumar Ganguly · Arijit Pasayat

Ratio decidendi

The rule this decision rests on

Where an insurance company seeks to repudiate a claim on the ground that the insured's driving licence is fabricated or not valid for the class of vehicle involved in the accident, the burden lies on the insurance company to prove the fabrication or invalidity, and mere production of a disputed document is insufficient; the insurance company must establish its defence by competent evidence, including if necessary an affidavit from the issuing authority to establish the licence is forged or fake. The ratio in National Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297 — that an insurance company must prove a breach of policy conditions by the insured — applies only to third party claims and does not apply to own-damage or contractual liability claims in motor insurance policies; in contractual liability claims, the insurer's burden to prove breach of the licensing condition is not the same as in statutory third party claims.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

REPORTABLE
IN THE SUPREME COURT OF INDIACIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2009(@ SPECIAL LEAVE PETITION (CIVIL) NO. 19995 OF 2007)
National Insurance Company Limited ...Appellant(s)
- Versus -
J. Maheshwaramma ...Respondent(s)
J U D G M E N T
GANGULY, J.
1. Leave granted.
2. This appeal has been filed impugning the
judgment and order dated 3.9.2007 passed by
the National Consumer Disputes Redressal
Commission, New Delhi (hereinafter referred to
as `the National Commission').
1
3. The said National Commission in exercise of

its revisional jurisdiction refused to

interfere with the concurrent findings of both

the District Forum and the State Commission.

4. The facts which were alleged in the complaint

filed before the District Forum, Mehboob

Nagar, are as follows:

5. The husband of the complainant late Beesana,

obtained policy bearing No.6200001644/2005

from the National Insurance Company Limited

for Rs.1,00,000/-. The policy covers the risk

of accidental death of insured. The legal heir

of the insured will get Rs.1,00,000/- under

the policy. The policy holder died on

24.11.2005 in a road accident while he was

proceeding on his motorcycle bearing No. AP

22-J278 from Gadwal to Veerapoor. On the way

in the limits of PJP Colony, where the tractor

bearing No. AP 22 C 3422 which was coming from

2 the opposite side, came at a high speed in a

rash and negligent manner and hit the motor

cycle of Beesanna and Beesanna sustained fatal

injuries. The doctors advised to shift him to

Kurnool hospital. While on the way to Kurnool

hospital, Beesanna succumbed to the injuries.

6. Thereafter, the complainant submitted Claim

Form of the appellant herein along with all

other relevant documents.

7. The main contention raised by the appellant

before the District Forum was that the

deceased had no valid licence at the time of

accident. The fact that late Beesanna obtained

the policy to cover a risk to the third

parties, own damages and personal accident is

not disputed by the appellant. It is also not

in dispute that at the time of accident, the

insurance policy was valid.

3

8. It is not in dispute that as per the terms of

the policy, the nominee will get Rs.1,00,000/-

if the policy holder dies in a motor accident

.

9. The stand of the appellant is that the driving

licence of the deceased which was sent for

verification is found to be fabricated. Their

further stand is that the policy holder had

got driving licence to drive Tractor Trailer

(Transport) but had no licence to drive

motorcycle with gear.

10. Before the District Forum, the stand of the

appellant was that Exhibit B-1, the licence of

the deceased purports to be a fabricated one

created in favour of the deceased for the

purpose of wrongful gain.

11. The District Forum observed that they are

unable to appreciate the said stand because of

the reason that the contents of Exhibit B-2

4 have not been challenged before it by the

insurer by way of affidavit of the authority

which issued the certificate.

12. The District Forum came to a finding that the

burden wholly lies on insurance company to

establish the defence raised by it in such a

proceeding and also to establish the breach on

the part of the insured.

13. In support of its contention the District

Forum has quoted the judgment passed by the

National Commission in National Insurance Co.

Ltd. Vs. Swaran Singh and Ors. -(2004) 3 SCC

297; wherein it has been clearly laid down

that the breach of policy condition has to be

proved by the insurance company and it is very

clear that the burden of proof is on them.

14. In National Insurance Co. Ltd. (supra) it has

been held that the burden is on the insurer to

prove that the insured is guilty for willful

5 breach of conditions of insurance policy or

the contract of insurance. (See para 92, page

337).

15. In coming to the said conclusion the learned

Judges relied on the decision in the case

of United India Insurance Co. Ltd. Vs. Lehru

and Ors. - (2003) 3 SCC 338 and held if

a person has been given a licence for

driving a particular type of vehicle, it

cannot be said that he has no driving licence.

In this case it is an admitted fact that the

victim had licence to drive a tractor with

trailer, but the allegation of the appellant

is that victim's licence to drive the

motorcycle with gear is fabricated. In any

event it cannot be said that the victim had no

driving licence. In such a case, it has to be

found on the basis of evidence laid before the

fact finding body whether the driver licenced

to drive one type of vehicle but driving

6 another type of vehicle was the main or the

contributory cause of the accident.

16. If such a case is not made out, the insurance

company cannot avoid its liability merely on

the basis of technical breach of licencing

conditions. [See para 89, page 336 of the

report in National Insurance (supra)].

17. In view of the aforesaid legal position, the

District Forum held that the insurance company

before it failed to establish valid grounds on

which they can repudiate the claim. As such

the repudiation of the claim by the insurance

company was held arbitrary and unreasonable.

18. On this finding the District Forum held that

the complainant-wife of the deceased is

entitled for the sum assured of Rs.1,00,000/-

together with interest thereon @ 9% per annum

from the date of repudiation of the claim i.e,

28.2.2006.

7

19. Against the said judgment of the District

Forum, an appeal was filed by the appellant

before the State Commission. The State

Commission also accepted the finding of the

District Forum in view of the fact that there

is no dispute with regard to the complainant's

husband having a valid insurance policy and

also in view of the fact that there is no

dispute that the accident occurred and the

insured died during the validity of the said

policy.

20. In view of such concurrent finding, the

National Commission did not interfere with the

same. The State Commission also came to a

finding that the burden is on the Insurance

Company to show that the driving licence of

the deceased was fabricated and the said

burden has not been discharged.

8

21. The basic issue in the case was whether the

deceased had a valid driving licence to drive

the vehicle i.e. motor cycle with gear which

was involved in the accident. The District

Forum, State Commission and National

Commission were of the view that since the

deceased had a valid insurance policy and

there was no dispute that the accident had

taken place and the insured died during the

validity of said policy, the stand that the

driving licence of the deceased was fabricated

was of no consequence. It was held that the

insurance company had not discharged the

burden to prove that the driving licence of

the deceased was fabricated. The District

Forum observed that no affidavit of the

authority who issued the certificate (Ex.B-2)

has been filed. The view was endorsed by the

State Commission and by the National

Commission. Additionally, the National

Commission held that the licence produced

clearly indicated that the deceased was having

9 licence to drive motor cycle also. This

finding cannot be maintained because there was

a dispute about the genuineness of the licence

failed to show that the deceased had licence

to drive motor cycle. Additionally after Exh.

B-2 was filed, there was no material brought

on record by the complainant to show that the

certificate dated 27.2.2006 issued by

transport authorities was not authentic.

Therefore the question of the insurance

company having not discharged the burden, does

not arise. In addition the decision in Swaran

Singh's case (supra) was considered in

National Insurance Co. Ltd. Vs. Laxmi Narain

Dhut [2007 (4) SCALE 36]. In Laxmi Narain's

case (supra) this Court observed that the said

decision is applicable to only third party

claim cases and even had no application to own

damage cases i.e. cases of contractual

liability. The present case is not a third

party case and is a case of contractual

10 liability and therefore Swaran Singh's case

(supra) was not applicable.

22. In the circumstances we think that it would be

appropriate to remit the matter to the

National Commission to consider the matter

afresh in the light of Laxmi Narain's case

(supra). The National Commission shall permit

the parties to place material on record

regarding the authenticity or otherwise of the

driving licence.

23. The appeal is disposed of.

.......................J. (Dr. ARIJIT PASAYAT)

.......................J. New Delhi (ASOK KUMAR GANGULY) May 08, 2009

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