UNITED INDIA INSURANCE CO. LTD. versus SHRI GIAN CHAND AND ORS.

Citation: [1997] SUPP. 3 S.C.R. 691 · Decided: 02-09-1997 · Supreme Court of India · Bench: S.B. MAJMUDAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

UNITED INDIA INSURANCE CO. LTD. 
A 
v. 
SHRI GIAN CHAND AND ORS. 
SEPTEJviBER 2, 1997 
B 
[S.B. MAJMUDAR AND B.N. KIRPAL, JJ.) 
Motor Vehicles Act, 1939 : 
Sections 96(2)(b )(ii) & 110-A-Vehicle insured against third pmty 
risk-Exclusion of liability by the Insurance Company under the Insurance C 
Policy in case insured allows the vehicle to be dliven by unlicensed 
driver--Car allowed to be driven by an unlicensed driver killing a 
scoote1ist-Insured did not step into the wimess box to prove his case that he 
had sold and handed over the car to drive!'-f1eld, an adverse inference could 
be drawn against the insured that the vehicle W{IS handed over by him for D 
being driven by an unlicensed driver-Thus the specified condition of the 
Insurance Policy having been breached by the insured, insurance company 
would be exonerated from its liability to meet the claim of the dependent of 
the third pmty (victim of the accident). 
A car insured by R-9 with the appellant against third party risk, met 
with an accident killing a person. The dependents of deceased filed a claim 
for compensation before the Motor Accident Claim Tribunal. The conten-
tion of the respondent-claimants was that the vehicle was driven by the 
driver, R-1, in a rash and negligent manner and because of such driving 
fatal accident occurred to their bread winner. The defence of the owner of 
the vehicle, R-9 was that he had already sold and hand.ed over his car to 
R-1 and, therefore, he had nothing to do with the claim. However R-1. 
repudiated the claim on the ground that he neither purchased the car nor 
E 
F 
did he drive the car. R-1 also stated that he had no licence at the relevant 
time to drive the vehicle. R-9 did not enter the witness box to prove his G 
case. 
The defence of the appellant-Insurance Company was that whatever 
be the liability of R-1 and R-9 regarding the claim of compensation, the 
appellant stood exonerated by the exclusion clause in the Insurance Policy H 
691 
692 
SUPREME COURT REPORTS [1997} SUPP. 3 S.C.R. 
A which did not permit the insured to hand over the vehicle, for purpose of 
driving, to an unlicensed driver. 
B 
The Tribunal found that the accident was caused due to rash and 
negligent driving of R-1 and that R-9 did not sell and hand over the car to 
R-1. The claim was computed and was made payable by R-1 and R-9. 
Appellant-Insurance Company got exonerated on the ground of its defence, 
in view of Section 96(2)(b) of the Motor Vehicles Act. On appeal before the 
High Court by R-1, the Insurance Company was held liable jointly and 
severally to pay along with the insured and the driver relying upon the 
decision of this Court in Skandia Insurance Co. Ltd. v Kokilaben 
C Chandravandan & Ors., [1987] 2 SCC 654. Hence, this appeal by the 
Insurance Company. 
Allowing the appeal, this Court 
HELD: 1. It has been clearly held by the Tribunal as well as by the 
D High Court that Respondent 1 who was permitted to drive the vehicle, by 
Respondent 9, the insured, was admittedly not having any driving licence. 
It was not the case of Respondent 9, the insured, that he did not know that 
Respondent 1 to whom the vehicle was handed over was not having a valid 
licence. In fact, once he did not step into the witness box to prove his case, 
E an adverse inference had necessarily to be drawn against him to the effect 
that the vehicle had been handed over by him for being driven by an 
unlicensed driver, Respondent I. Under the Circumstances, when the in· 
sured had handed over the vehicle for being driven by an unlicensed driver, 
the Insurance Company would get exonerated from its liability to meet the 
claims of the third party who might have suffered on account of vehicular 
F 
accident caused by such unlicensed driver. [697-D-E] 
New India Assurance Co. Ltd. v. Manohar Madhav Tambe, [1996] 2 
SCC 328; Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan, [1987] 2 
SCC 654; Kashiram Yadav v. Oriental Fire & General Insur(JITce Co., [1989] 
G 4 SCC 128 and Sohan Lal Passi v. P. Sesh Reddy, discussed. 
2. The appellant-Insurance Company is not liable to meet the claim 
of the respondent-claimants. The claim petition will stand rejected against 
the appellant Insurance Company. The respondent·ciaimants will, however 
be entitled to recover the awarded amount of compensation from Respon· 
H dents 1 and 9. [699·B] 
UNITED INDIA INSURANCE CO. LTD. v. GIAN CHAND [S. B. MAJMUDAR, J.) 
693 
CIVIL APPELLATE JURISDICTION : Civil A

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