Bajaj Allianz General Insurance Company Ltd. v. Insurance Ombudsman and Janani Kumar.R

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **WEDNESDAY, THE 10TH DAY OF APRIL 2013/20TH CHAITHRA 1935 WP(C).No. 16749 of 2008 (R) ----------------------------** ## **PETITIONER/PETITIONER:** **----------------------** **BAJAJ ALLAINZ GENERAL INSURANCE** **COMPANY LTD., PUNE, REP. BY ITS LEGAL EXECUTIVE MR. AMBILI GEORGE, BAJAJ ALLIANZ GENERAL INSURANCE COMPANY LTD., 3RD FLOOR, FINANCE TOWER, KALOOR, KOCHI-17.** **BY ADVS.SRI.LAL GEORGE SRI.R.AJITH KUMAR (128/84)** ## **RESPONDENTS/RESPONDENTS:** **-------------------------** **1. THE INSURANCE OMBUDSMAN, OFFICE OF THE INSURANCE OMBUDSMAN, PULINUT BUILDING, 2ND FLOOR OPPOSITE COCHIN SHIPYARD, M.G. ROAD, ERNAKULAM REP. BY ITS SECRETARY.** **2. JANANI KUMAR.R, WARD NO.6, HOUSE NO. 378, PALLIKKARA, KASARAGOD-671316.** **R1 BY ADV. DR.ELIZABETH VARKEY R2 BY ADV. SRI.JAWAHAR JOSE** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 10-04-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No. 16749 of 2008 (R)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** |**EXT.P1**|**:**|**TRUE COPY OF THE POLICY**| |---|---|---| |**EXT.P2**|**:**|**TRUE COPY OF THE LETTER OF INTIMATION**| |**EXT.P3**|**:**|**TRUE COPY OF THE REGISTRATION CERTIFICATE**| |**EXT.P4**|**:**|**TRUE COPY OF THE license HELD BY THE DECEASED DRIVER**| |**EXT.P5**|**:**|**TRUE COPY OF THE PROCEEDINGS REPUDIATING THE CLAIM**| |**EXT.P6**|**:**|**TRUE COPY OF THE COMPLAINT NO.10/KCH /GI/11-011-281/2007-**| |||**2008**| |**EXT.P7**|**:**|**TRUE COPY OF THE VERSION SUBMITTED BY THE**| |||**PETITIONER COMPANY**| |**EXT.P8**|**:**|**TRUE COPY OF THE AWARD**| ## **RESPONDENTS' ANNEXURES: NIL** ## **//TRUE COPY//** ## **P.A. TO JUDGE** **jma** **K. VINOD CHANDRAN, J - - - - - - - - - - - - -- - - - - - - - - - - - - - - - W.P(C) No.16749 of 2008** **- - - - - - - - - - - - - - - - - - - - - - - - - - - -** ## **Dated this the 10[th] day of April, 2013** ## **J U D G M E N T** The petitioner is an Insurance Company, challenging Ext.P8 order of the learned Insurance Ombudsman, Kochi. The Insurance Ombudsman, by Ext.P8 order granted the claim raised by the second respondent directing the insurer to pay a sum of Rs.1,68,500/- together with interest @ 9% per annum from the date of the claim till payment; being the loss assessed by the surveyor appointed by the Insurance Company, of the vehicle involved in an accident and owned by the second respondent. The 'light motor vehicle' owned by the second respondent was registered as a tourist taxi and was capable of carrying six persons other than the driver. There is no dispute that an accident occurred on 9.7.2006, wherein the subject vehicle driven by the brother of the registered owner was totally damaged and the driver, succumbed to the injuries suffered in the accident. 2. The entire issue revolves around the driver WPC.16749/2008 : 2 : being eligible or ineligible to drive a “transport vehicle”. It is also not in dispute that the brother of the second respondent had a “light motor vehicle driving licence” issued under the Motor Vehicles Act, 1988 and Rules framed thereunder. However the repudiation of the claim was based on the fact that the vehicle which was involved in the accident was a “transport vehicle” and to drive such a vehicle, it was required that the person should have “transport vehicle driving licence” as provided under the 'authorization to drive a transport vehicle' under Rule 6 of the Kerala Motor Vehicles Rules, 1989. That the person who was driving the vehicle at the time of accident did not have such an authorisation to drive a transport vehicle also is not in dispute 3. The learned ombudsman framed two issues with respect to limitation on account of delay in raising the claim and as to whether the driver can be said to have no effective licence at the time of accident; for considering the question of the validity and the propriety of the repudiation made by the insurance company. The learned ombudsman rightly found that there was no delay in intimating the accident to the WPC.16749/2008 : 3 : Insurance Company. It was held that the delay caused, if at all any, did not prejudice the Insurance Company, since, admittedly, the surveyor was able to assess the damage of the vehicle, which was garaged after the accident. 4. In considering the question of repudiation,on the basis of there being no valid 'authorization for driving a transport vehicle' the learned Ombudsman extracting section 3 of the Motor Vehicles Act focussed on the exemption with respect to the driving of a transport vehicle, which is a hired or rented motor cab. Section 3 of the Act reads as under:- “No person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorizing him to drive the vehicle; and no person shall so drive a transport vehicle other than a motor cab or motor cycle hired for his own use or rented under any scheme made under sub-section (2) of Section 75 unless his driving licence specifically entitles him so to do” WPC.16749/2008 : 4 : The learned ombudsman laboured considerably in drawing a distinction between “hire” and “rent” as used in Section 3 and found that since Section 75 only refers to renting, the issue of hiring for one's own use stands distinct and separate from the renting under Section 75. On that premise, it was held that the appellant having admitted that at the time of accident, his brother had taken the vehicle for his own use; it can be safely assumed that the vehicle was used for the drivers own use and the requirement under section 3 is clearly exempted. The learned Ombudsman also distinguished certain decisions of the Hon'ble Supreme Court placed by the Insurance Company and directed the settlement of the claim as assessed by the surveyor of the insurance company. 5. The learned counsel for the petitioner- insurance company, draws my attention to **New India Insurance Co.Ltd. v. Prabhu Lal(2008(I)SCC 696)** wherein the effect of a driver having a valid licence only to drive a light motor vehicle, drives a “transport vehicle” and involves incidentally in an accident, was considered as a valid ground for repudiation of “own claim” made by registered owner of the WPC.16749/2008 : 5 : vehicle. The leaned counsel for the respondent per contra emphasizes the distinction drawn by the learned Ombudsman under Section 3 with respect to “hire” and “rent”. The learned counsel also relies on a decision of the Supreme Court reported in **National Insurance Co. Ltd v. Swaran Singh and others( 2004(3) SCC 297)** wherein the issue of repudiation of claim, for the reason that the person who had been granted licence for one type of vehicle was at the relevant time of accident driving another type of vehicle, was considered. The Supreme Court answering the question held that it is an issue which has to be decided on evidence as to whether it was the factum of the driver possessing another type of licence alone that led to the accident. The learned counsel for the Insurance Company, however, distinguished the said decision pointing out that the same is with respect to third party claims, in which that proposition is unassailable; but cannot be relied on when deciding own claims under a comprehensive insurance policy. 6. The learned counsel for the respondent also would rely on **B.V Nagaraju v. M/s.Oriental Insurance Co.** WPC.16749/2008 : 6 : **Ltd.,(1996 (4) SCC 647)** and **Jitendra Kumar v. Oriental Insuarance Co. ltd. (2003(6)SCC 420)** to contend that the Insurance Company does not have a case that the accident occurred due to the negligence of the driver and the absence of authorization to drive a “transport vehicle” pales into insignificance; and that alone cannot be a reason for repudiation of the claim. While **Nagaraju (Supra)** held the breach, of carrying human beings in a goods vehicle more than the number permitted in terms of policy, to be not so fundamental a breach as to afford the insurer, a ground to eschew liability altogether, **Jitendra Kumar (supra)** also dealt with an issue of the vehicle catching fire due to mechanical failure and not due to any fault, act or omission of the driver. In the instant case, there is no plea regarding the negligence or otherwise of the driver of the motor cab; for either party. If that was the plea; then, it should have been specifically urged and substantiated before the Ombudsman. There is absolutely no pleading to that effect nor has the issue been discussed by the learned Ombudsman. In such circumstance, this Court is of the opinion that the above cited WPC.16749/2008 : 7 : decisions are not relevant in considering the aspect placed before this Court. **Swaran singh** also is not of significant import since as pointed out by the learned counsel for the Insurance Company, the law declared therein is only applicable to third party claims and not to “own claims”. 7. **Prabhulal(supra)** was a case in which a Tata 709 vehicle, registered as a transport vehicle, was involved in an accident when the brother of the registered owner, who had only a light motor vehicle license, was driving the vehicle. The vehicle was found to be registered as a truck, a goods carrier, and was described as a public carrier. It was also clearly found that the brother of the registered owner who only had a “light motor vehicle license” was at the wheel of the vehicle when the accident occurred. The vehicle being one covered by the category of “transport vehicle” under Clause 47 of Section 2 of the Act, it was held that Section 3 mandated the driver to have an endorsement which would entitle him to drive such vehicle. It was in that circumstance that the absence of the authorization to drive a transport vehicle in the said case was found to be fatal to the claim for WPC.16749/2008 : 8 : damages raised by the registered owner of the vehicle. In the present case, there is a subtle distinction in so far as the claim is maintained by the registered owner on the premise that Section 3 provides for an exception in so far as a motor cab or motor cycle “hired for his own use or rented under any scheme made under sub section(2) of Section 75”. The specific contention of the registered owner is that his brother who was entitled to drive a light motor vehicle had taken out the said vehicle for his own use, when the accident occurred. The vehicle being a motor cab (Light Motor Vehicle) and the driver having a valid driving license to drive a light motor vehicle; there was no requirement of an authorisation to drive a transport vehicle, since the driver had taken the vehicle for his own use; is the contention. 8. This Court primarily is concerned with whether there is any distinction with respect to the words “hired” and “rented” used in section 3 of the Act. In almost similar situations, the vehicle purchased as a taxi but insured as a private vehicle was involved in an accident, considerably damaging the vehicle and killing the passengers therein. WPC.16749/2008 : 9 : There too, the brother of the registered owner who had a light motor vehicle license was at the wheel when the accident occurred. The repudiation of claim based on the absence of authorization to drive a transport vehicle reached the Allahabad High Court in **Sanjay Gupta v Oriental Insurance Company 1997 ACJ 216** . In the Division Bench there being a difference of opinion, the matter was referred to the third judge and the third judge concurred with the opinion that such repudiation is not possible, on a correct interpretation of the exception provided in section 3 of the Act. In the said decision, the learned judge of the Division Bench whose view was confirmed by the third judge examined the history of the legislation. After extracting section 3 of the Act, as it survives now, Section 3 of the Act of 1939 prior to its amendment in 1969 was noticed as under:- 44. For appreciating the intent of section 3, it is necessary to notice its legislative history. Section 3 of the Act of 1939 prior to its amendment in 1969 stood as under: “3. Necessity for driving license--(1) No person shall drive a motor vehicle in any public place WPC.16749/2008 : 10 : unless he holds an effective driving license issued to him authorising him to drive the vehicle; and no person shall so drive a motor vehicle as a paid employee or shall so drive a transport vehicle unless his driving license specifically entitles him so to do. (2) a State Government may prescribe the conditions subject to which sub section(1) shall not apply to a person receiving instructions in driving a motor vehicle” The section placed an absolute bar on any person to drive a transport vehicle unless he possessed license for the same. The said section was amended by Act.No.56 of 1969 and sub-section (3) was inserted in the said section, which is as under:- “(3) Notwithstanding anything contained in subsection (1) , person who holds an effective driving license authorising him to drive a motor car may drive any motor cab hired by him for his own use” The object and reasons for amending section 3 of the Motor Vehicles Act, 1939, by inserting Clause 3, was extracted in Paragraph 45:- 45. The object and reasons for amending section 3 of the Motor Vehicles Act, 1939, by inserting clause (3) are as follows:- “Clause 3- Under the existing law, a person possessing a driving license for a private car cannot drive a taxi cab even for his own use. In WPC.16749/2008 : 11 : foreign countries, however, it is possible to hire and drive a taxi cab on payment of moderate charges. This clause seeks to introduce a similar facility in India, particularly for the purposes of promotion of tourism.” 9. It was found that while section 3 of the Act of 1939 prior to its amendment in 1969 placed a complete embargo for driving a transport vehicle unless a person driving such vehicle holds an authorization to drive a transport vehicle, by the 1969 amendment a person who holds an effective driving licence authorizing him to drive a motor car was permitted to drive any motor cab hired by him for his own use. Hence by the said amendment a person who hires a taxi for his own use can drive the same even in the absence of an authorization to drive a transport vehicle; provided he has an effective driving licence to drive a vehicle, i.e, in the case of a motor cab a light motor vehicle driving license. It was this amendment that was retained in the Act of 1988 and hence, the words “hired for his own use and rented under any scheme under sub section 2 of section 75” used in Section 3 has to be given separate connotation applicable in different WPC.16749/2008 : 12 : contexts. 10. Section 3 of the Act of 1988 has to be held to be dealing with two different situations; one being an act of rent-a-car under a scheme under section 75 and the other being a hiring for one's own use; the latter as was contemplated in the Act of 1939 itself. It was held by the learned Judge of the Division Bench in his dissenting opinion that it was the user of the vehicle that assumes significance in considering the liability of the insurance company and not the type of driving licence to be held by the driver of the vehicle. The third Judge who agreed with the dissenting view summarized so his conclusions: 14. The questions referred to by the Division Bench are answered as under: - (1)(a) If a vehicle, which was registered as a taxi, meets an accident, insurance company cannot disown its liability to compensate for the loss merely on the ground that the driver driving the vehicle was not holding a driving license, which entitled him to drive a transport vehicle (taxi) unless the insured was at fault in placing the vehicle in charge of a person, who was not holding a driving license to drive the vehicle; (b) If a taxi(motor cab) has been hired for one's own use or rented under a scheme under Section 75 of the Act, insurance company cannot refuse to pay the WPC.16749/2008 : 13 : compensation even if the said vehicle at the time of the accident was being driven by a person, who was holding a driving license to drive a private car and was not holding a driving license to drive a taxi; - (2)There is no embargo under the Act prohibiting driving of a transport vehicle (motor cab-taxi) for private use by a person holding a valid driving license to drive a motor vehicle other than the transport vehicle, if the motor cab has been hired for his own use or rented under a scheme framed under section 75 of the Act. - (3)Insurance company was not justified to repudiate the claim of the petitioner. 11. In the instant case too, the vehicle was driven by the brother of the registered owner and there was no passengers in it at the time when it met with the accident. The specific contention of the registered owner was that his brother had taken out the vehicle for his own use and admittedly there is no contention that there was any hire as is provided for in the exception under section 3. It is to be noticed that by the exception provided under section 3, any person who hires a motor cab, which is a transport vehicle, for his own use could drive the same if he has a valid driving license to drive a light motor vehicle; even if he does not have an authorization to drive a transport vehicle. If that be so, it WPC.16749/2008 : 14 : can also be safely presumed that what is determinative is the user of the vehicle and if on hire for one's own use, a transport vehicle being a motor cab could be driven without specific authorization to drive a transport vehicle, then, even the registered owner will be entitled to drive such transport vehicle for his own use without an authorization to drive a transport vehicle; but of course subject to holding an effective 'light motor vehicle' driving license. In considering the user, the factum of hire or not, pales into insignificance, and then, the exception would be applicable in the facts of the instant case too. 12. The learned counsel for the petitioner/insurance company, based on Ext.P1, points out that there is a specific clause that the insured is not indemnified if the vehicle is used for driving otherwise than in accordance with its schedule. It is also pointed out that any person including insurer though entitled to drive, it is also provided that the driver should hold an effective license at the time of the accident. In the instant case, the brother of the registered owner/driver admittedly had a driving license with respect to a 'light motor vehicle'. WPC.16749/2008 : 15 : The vehicle which was involved in the accident, while the brother of the registered owner was driving, was a light motor vehicle. The fact that it was a transport vehicle, does not lead to an inference that the driver did not have an effective driving license since admittedly, the driver had taken out the vehicle for his own use, which has been exempted under section 3. The only mandate is the holding of an effective driving licence; which the driver had. 13. The learned counsel for the insurance company however, persists and takes me through **New India Assurance Co, Ltd v. Balakrishnan (2011(4)KLT 412)** specifically paragraph 14, which is extracted hereunder:- The learned counsel further contends that words “ other than a motor cab or motor cycle hired for his own use or rented under any scheme made under sub-section (2) of S. 75” must be read in such a manner as to suggest that a motor cab hired for his own use by a driver can be driven without the latter authorization (badge) as insisted by S.3 (1). We find no merit in this contention at all. A reading of S.75 would clearly reveal why the saving is provided in S.3(1). A person who hires for his own use or takes on rent a motor cab or motorcycle in accordance with the scheme under S.75(2) is permitted to drive/ride the vehicle even without a badge. The very scheme of S.75 would suggest that such motor cab/motorcycle which is WPC.16749/2008 : 16 : by definition a transport vehicle can be rented out to persons for their personal use. Such transport vehicles can be driven by persons who take on rent such vehicles. Though a transport vehicle, such vehicle is being used for the peculiar purpose mentioned in S.75. Such use of the vehicle by a non-professional driver who takes on rent the cab/motorcycle under the scheme under S.75 is permitted even without a badge. The laborious arguments attempted to be built on the basis of the words”other than....S.75” in S.3(1) is thus found to be without any substance. We take the view that whatever be the purposes for which the transport vehicle was being used by its driver(not under the scheme of S.75), the badge as required under the latter part of S.3(1) must be possessed by him.” 14. The learned counsel for the petitioner however would contend that the said decision is per-incuriam. One cannot understand the said decision in that perspective. The Division Bench noticed the exception in its entirety and took the 'hire' and 'rent' as being covered under a scheme of Section 75. 15. In **Balakrishnan(Supra)** too,the issue was with respect to third party claim but however, considering the exception in Section 3 it was held by the Division Bench of this Court that only when there is a hire or rent under a scheme of section 75, the exception would be applicable. The WPC.16749/2008 : 17 : decision of the Allahabad High Court definitely has a persuasive effect but the decision of the Division Bench is binding on this Court. The Division Bench has noticed the two limbs in the exception and then held as above. This Court is bound to follow the same. 16. In the said circumstance of the binding precedent noticed above, this court holds that the driver of the vehicle which was involved in the accident having no 'authorization to drive a transport vehicle', cannot be considered to be holding an effective driving license as is mandated in section 3. In such circumstance, the repudiation of the claim of the Insurance Company has to be upheld and I do so, setting aside the order of the learned Ombudsman. Writ petition is allowed, however leaving the parties to suffer their respective costs. **(K. VINOD CHANDRAN, JUDGE)** jma **//** true copy// P.A to Judge