Insurers cannot be excused from providing compensation on the basis of breach of policy: Karnataka High Court
Non-endorsement of the driving license of the driver who holds a valid license will not eliminate the liability of the insurer of providing compensation. The High Court of Karnataka, in the case of The Legal Executive of Bajaj Alliance General Insurance Company Ltd  v. Smt. Sharmila and others [MFA 3608/2017] benched by J. S Sujatha and J. Sachin Shankar Magadum shed light on whether the non-endorsement of driving license of a light motor vehicle would amount to breach of policy. Bharath Kumar while travelling to Bengaluru in a Maruthi Wagon R, met with a road traffic accident owing to the actionable negligence of the driver of a Tractor and Trailer (offending vehicle), due to which he sustained fatal injuries and died on spot. The claimants being the wife and the children of the deceased instituted a petition under Section 166 of the Motor Vehicles Act seeking for compensation. The deceased having been the sole earning member of the family, his untimely death  had caused unbearable loss a to the family. The appellants contended that the accident had occurred owing solely to the negligence of the deceased and further, since at the time of the accident neither deceased nor the driver of the tractor had valid driving license on them, the insurer was not liable to indemnify the owner of the offending vehicle. Also, that since the owner of the owner if the tractor breached the terms and conditions of the policy by transporting sand and hence, using it for commercial purpose, the insurer was not liable to pay compensation to the claimants. The Tribunal eventually awarded a total compensation of Rs.20,400/- with interest of 6% p.a. from the date of petition till its realization.  Aggrieved, the present appeal was filed by the insurer challenging the liability as well as the quantum of compensation. The counsel for the appellant argued that since the wife of the deceased is not an eye witness, her testimony is not to be relied upon. Also, that since the tractor was used for commercial purposes, a breach arose, and hence, the insurer had no liability and finally it was argued that the compensation awarded was exorbitant and unjust. The HC, relying on Mukund Dewangan v. Oriental Insurance Company Limited [(2017) 14 SCC 663] held that “no endorsement was required to drive the transport vehicle, the offending vehicle in question being a light motor vehicle as per the definition clause of Section 2(21) of the Act”. In the same case it was also held that “non-possessing of an endorsement on the driving license to drive the transport vehicle by the driver holding the valid and effective driving license to drive the light motor vehicle would not be a breach of the policy conditions and the same would not disentitle the claimants in claiming vehicular accident compensation”. Further it was stated that the mere fact the tractor was used for carrying sand does not mean that it was for a commercial purpose and hence, the insurer cannot be exonerated from his liability on the basis of breach of policy conditions.   Relying on the judgement of National Insurance Company Limited v. Pranay Sethi and others [(2017) 16 SCC 680] and New India Assurance Company Limited v. Somwati and others [Civil Appeal No. 3093 of 2020], the HC calculated the compensation and enhanced the quantum of the same.
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF NOVEMBER 2020 THE HON’BLE MRS.JUSTICE S.SUJATHA THE HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM M.F.A.No.3608 2017 c w M.F.A.No.4541 2017IN M.F.A.No.3608 2017: BETWEEN : THE LEGAL EXECUTIVE BAJAJ ALLIANZ GENERAL INSURANCE COMPANY LIMITED NO.324 1 D.SUBBAIAH ROAD CHAMARAJA MOHALLA MYSORE 570024 BY BAJAJ ALLIANZ GENERAL INSURANCE CO.LTD. REGIONAL OFFICE GOLDEN HEIGHTS 4TH LEVEL NO.1 2 59TH CROSS 4TH "M" BLOCK RAJAJINAGAR BANGALORE 560010 BY ITS MANAGER. BY SRI O.MAHESH ADV.) AND : 1 . W O LATE BHARATH KUMAR @ BHARATH AGED 44 YEARS 2 . KUM. POOJA D O LATE BHARATH KUMAR @ BHARATH ...APPELLANT 2 AGE 24 YEARS 3 . KUM. LIZA D O LATE BHARATH KUMAR @ BHARATH AGE 22 YEARS 4 . KUM. SIMRAN D O LATE BHARATH KUMAR @ BHARATH AGE 17 YEARS A MINOR REP BY HER NATURAL GUARDIAN MOTHER RESPONDENT No.1. ALL ARE R O KAILASH JEWELLERS M.G.ROAD CHIKKAMAGALURU CITY 577101. 5 . BASAVARAJU S O GANGE GOWDA AGED 36 YEARS R O CHIKKOUZA VILLAGE HIREGOUZA POST CHIKKAMAGALURU TALUK & DISTRICT 577101. W O SIDDEGOWDA AGED 84 YEARS R O MAGADI KAIMARA VILLAGE CHIKKAMAGALURU TQ & DISTRICT 577101. JITHENDRA @ JITHENDRA KUMAR S O HEMARAJ AGED ABOUT 44 YEARS R O KAILASH JEWELLERS M.G.ROAD CHIKKAMAGALURU CITY 577101. THE BRANCH MANAGER UNITED INDIA INSURANCE COMPANY LIMITED BRANCH OFFICE CRESENT COURT K.M.ROAD CHIKKAMAGALURU CITY 577101. …RESPONDENTS BY SRI GIRISH B. BALADARE ADV. FOR R 1 TO R 3 SRI K.S.GANESH ADV. FOR R 5 TO R 6 SRI P.B.RAJU ADV. FOR R 8 R 4 IS MINOR REP. BY R 1 R 7 SERVED.) 6 . 7 . 8 . 3 THIS M.F.A. IS FILED UNDER SECTION 173(1) OF M.V.ACT AGAINST THE JUDGMENT AND AWARD DATED 18.02.2017 PASSED IN MVC No.521 2013 ON THE FILE OF THE 2ND ADDITIONAL SENIOR CIVIL JUDGE AND JMFC AT CHIKKAMAGALURU AND MACT AWARDING COMPENSATION OF Rs.20 40 000 WITH INTEREST AT THE RATE OF 6% P.A. FROM THE DATE OF PETITION TILL THE REALIZATION. IN M.F.A.No.4541 2017: BETWEEN : 1 . W O LATE BHARATH KUMAR @ BHARATH AGED ABOUT 44 YEARS 2 . KUM. POOJA 3 . KUM. LIZA D O LATE BHARATH KUMAR @ BHARATH AGED ABOUT 24 YEARS D O LATE BHARATH KUMAR @ BHARATH AGED ABOUT 22 YEARS 4 . KUM. SIMRAN D O LATE BHARATH KUMAR @ BHARATH AGED ABOUT 17 YEARS BEING MINOR REP BY HER NATURAL GUARDIAN MOTHER i.e. THE APPELLANT HEREIN ALL ARE R AT KAILASH JEWELLERS M.G.ROAD CHIKKAMAGALURU CITY 577101. AND : 1 . BASAVARAJU S O GANGEGOWDA AGED ABOUT 36 YEARS R AT CHIKKOUZA VILLAGE BY SRI GIRISH B. BALADARE ADV.) ...APPELLANTS 4 2 . GANGAMMA HIREGOUZA POST CHIKKAMAGALURU TALUK & DISTRICT 577 101. W O SIDDEGOWDA AGED ABOUT 84 YEARS R AT MAGADI KAIMARA VILLAGE CHIKKAMAGALURU TALUK & DISTRICT 577 101. THE LEGAL EXECUTIVE BAJAJ ALLIANZ GENERAL INS. CO. LTD. NO.324 1 D. SUBBAIAH ROAD CHAMARAJA MOHALLA MYSORE 570001. JITHENDRA @ JITHENDRA KUMAR S O HEMARAJ AGED ABOUT 44 YEARS R AT: KAILATH JEWELLERS M.G. ROAD CHIKKAMAGALURU CITY & DISTRICT 577 101. THE BRANCH MANAGER UNITED INDIA INSURANCE CO. LTD. BRANCH OFFICE CRESENT COURT K.M. ROAD CHIKKAMAGALURU CITY & DISTRICT 577 101. …RESPONDENTS BY SRI O.MAHESH ADV. FOR R 3 NOTICE TO R 1 R 2 R 4 & R 5 ARE DISPENSED WITH VIDE COURT ORDER DATED 05.11.2019.) THIS M.F.A. IS FILED UNDER SECTION 173(1) OF M.V.ACT AGAINST THE JUDGMENT AND AWARD DATED 18.02.2017 PASSED IN MVC No.521 2013 ON THE FILE OF THE 2ND SENIOR CIVIL JUDGE AND JMFC CHIKKAMAGALURU PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION. THESE APPEALS COMING ON FOR HEARING THIS DAY S. SUJATHA J. DELIVERED THE FOLLOWING: 3 . 4 . 5 . 5 JUDGMENT The insurer and the claimants are in appeal challenging the judgment and award dated 18.2.2017 passed in MVC No.521 2013 by the II Addl. Sr. Civil Judge & JMFC Chikkamagaluru & MACTseeking compensation for the death of the said Bharath Kumar in the motor vehicle accident. The claimants contended that the said Bharat Kumar while proceeding in Maruthi Wagon R car belonging to the respondent No.4 Sri.Jithendra from Chikkamagaluru to Bengaluru met with the road traffic accident on 10.3.2013 at about 7.15 a.m. to 7.30 a.m. owing to the actionable negligence of the driver of the Tractor and Trailer bearing Reg. No.KA 16 T 6787 and KA 18 TA 6 3492 14 SCC 663 no endorsement was required to drive the transport vehicle the offending vehicle in question being a light motor vehicle as per the definition clause of Section 2of the Act. It was further argued that the charge sheet was filed against the driver of the offending vehicle. No independent evidence was let in by the appellant insurer to establish the factum of negligence on the part of the driver of the Maruthi Wagon R car. Acquittal of the driver in the criminal proceedings would have no relevance for determining the negligence aspect in the present proceedings. 15. Learned counsel appearing for the insurer of the Maruthi Wagon R car submitted that the Tribunal has analysed the material evidence in a right 13 perspective and has rightly fixed the liability on the appellant insurer. The same requires to be confirmed rejecting the appeal filed by the insurer. 16. We have carefully considered the rival submissions of the learned counsel appearing for the parties and perused the original records. 17. Arguments of the learned counsel for the appellant insurer regarding the issue of negligence and liability requires to be rejected for the reason that admittedly the laden weight of the offending vehicle is 4000 kgs as per Ex.R3. Section 2(21) of the Act contemplates that “light motor vehicle” means a transport vehicle or omnibus the gross vehicle weight of either of which or motor car or tractor or road roller the unladen weight of any of which does not exceed 7500 18. The Hon ble Apex Court in Mukund Dewangan supra has categorically held that non kgs. 14 possessing of an endorsement on the driving licence to drive the transport vehicle by the driver holding the valid and effective driving licence to drive the light motor vehicle would not be the breach of the policy conditions and the same would not disentitle the claimants in claiming vehicular accident compensation. In the light of the said judgment coupled with Ex.R3 we have no hesitation to hold that no endorsement was required to drive the transport vehicle. Hence the appellant insurer cannot be exonerated from the liability to indemnify the owner. Acquittal of the driver of the tractor and trailer in criminal proceedings would certainly have no bearing to adjudicate the issue of negligence in the motor vehicle compensation cases. It is trite that in the criminal proceedings the order of acquittal may be passed on benefit of doubt and such order would not be considered to be a relevant factor to absolve the insurer from its liability. Moreover police records support the case of the claimants. Charge 15 sheet has been filed against the driver of the offending vehicle. No independent evidence is adduced by the appellant insurer to rebut the claim of the claimants. 19. RW 1 has categorically admitted that tractor and trailer could be used to transport the sand for the purpose of construction of pump house in the land and for agricultural purposes. As per the police records Smt.Gangamma had entrusted the tractor and trailer to Sri.Basavaraju to take the sand from her house to Karvikere Beeradevanahalli Haliyuru. The appellant insurer neither in the written statement nor in the evidence has taken a defence that the tractor and trailer was used for commercial purpose. Merely it was carrying sand would not mean that the tractor was being used for commercial purpose and consequently there was a breach of the condition of policy on the part of the insured. On this ground appellant insurer cannot be exonerated liability. 16 20. We have perused the income tax returns and the letter of jurisdictional income tax officer dated 02.02.2016 which clearly demonstrates that the income tax return was filed by the deceased on 29.3.2012 relating to the assessment year 2011 12 declaring the annual income of Rs.1 48 530 . Returns were filed on 17.1.2014 relating to the assessment year 2012 13 declaring the income as Rs.1 64 120 . Thus it is clear that the income tax returns for the assessment year 2011 12 was filed by the deceased much prior to the accident. It is evident that the deceased was the owner of Paridhi Sarees and Dress Materials situated at Bengaluru. Ex.P13 is the Registration Certificate issued under the provisions of the VAT Act. Ex.P15 is the business licence issued by C.M.C Chikkamagaluru. The material evidence would disclose that the deceased in addition to textile business was engaged in jewellery business. 17 21. Having regard to the business carried on by the deceased the Tribunal has determined the monthly income at Rs.15 000 for the purpose of reckoning the loss of dependency which cannot be faulted with. As per the post mortem report Ex.P8 the age of the deceased was 42 years. As per the driving licence at Ex.P10 the age of the deceased at the time of accident was 43 years. Considering the same the Tribunal has applied the multiplier of 14 deducting 1 4th of the income towards the personal and living expenses of the deceased to compute the loss of dependency which in our considered opinion just and reasonable. However the Tribunal has failed to award compensation towards future prospects. 22. Having regard to the age of the deceased and his self employment 40% of the income requires to be added towards future prospects. Thus the total annual income of the deceased would be Rs.2 52 000 . 18 Applying the multiplier of 14 deducting ¼ the of the income towards personal expenses of the deceased loss of dependency would work out to Rs.26 46 000 Rs.2 52 000 x 14 x ¾). In terms of the judgment of the Hon ble Apex Court in National Insurance Company Limited Vs. Pranay Sethi and others and New India Assurance Company Limited V s. Somwati and Others the claimants are entitled to compensation of Rs.1 90 000 under the conventional heads. Loss of dependency Loss of spousal Loss of parental Rs.40000 to each child) Funeral expenses Loss of estate Amount26 46 000 40 000 1 20 000 15 000 15 000 28 36 000 19 Thus in all the claimants shall be entitled to total compensation of Rs.28 36 000 . Hence the following: The appeal filed by the Insurance Company in MFA.No.3608 2017 is dismissed and the MFA.No.4541 2017 is partly allowed. The total compensation awarded by the is modified and enhanced Rs.28 36 000 as against Rs.20 40 000 with interest at the rate of 6% per annum from the date of the claim petition till its appellant insurer i.e. Bajaj Allianz General Insurance Co. Ltd. is confirmed. The portion of the order of the Tribunal disbursement remains intact. 20 The insurance company shall deposit the amount determined as aforesaid before the Tribunal within 90 days from the date of receipt of the certified copy of the judgment and order. The modified compensation amount shall be apportioned and disbursed in terms of the order of the Tribunal. vii) Draw modified award accordingly. viii) The Registry shall transfer the amount in deposit with original jurisdictional Tribunal forthwith. Sd Sd Dvr: 