New India Assurance Co. Ltd. which was the Opposite Party before the District Forum has filed the present Revision Petition against the judgement dated 19^th September, 2006 passed in Appeal No.108/2005 by the Himachal Pradesh State Consumer Disputes Redressal Commission (for short,   State Commission) whereby the State Commission has dismissed the Appeal  filed by  Petitioner.

          Briefly stated the facts are:

Complainant-Respondent’s vehicle was insured  under the  Goods Carrying Commercial Vehicle Policy issued by the Petitioner for the period 27.8.92 to 26.8.93 with insured’s  estimated value of Rs.3,75,000/-.   During the policy period, on.1.3.993, the truck met with an accident and was damaged.  It resulted in death of three passengers traveling in the truck.

            Petitioner on being informed deputed a surveyor who assessed the loss on repair basis at Rs.1,70,000/- net.  After deducting the taxes and salvage value of the damaged parts, the loss was assessed  at Rs.1,48,000/-.   On total loss basis the loss was assessed  at Rs.2,40,000/-   In the same report the surveyor mentioned as under:

“The claim was discussed with the Insured at D.O. Shimla in the presence of D.M. and B.M. and after a long discussion Insured has agreed for a sum of Rs.1,20,000/- only as full and final settlement of the above claim as on cash loss basis settlement.”

          At the material time the said truck was being driven by one Liakat Ali.  Driving license of Liakat Ali was got verified  and   it was found that D.L. No.14/RHU/93 was not an original license but a renewal of   original license  No.1874-P-90 which, on verification was found  not to have been issued to Liakat Ali  but to one Vishal Gupta.  The said renewal was also effected 47 days after the date of accident i.e. 17.04.93   Respondent did not produce driving license No.1874-P-90 or  even renewed license No.14/RHU/93 to the Petitioner or District Forum/State Commission.   Since the driver of the truck did not have  valid and effective driving license  issued by the authority on the date of accident, claim preferred by the Respondent was repudiated by the Petitioner.    Respondent being aggrieved filed complaint before the District Forum.

          On being served, Petitioner put in appearance before the District Forum and contested the complaint and took the stand that since the driver of the accidental vehicle did not have a valid and effective driving license, Petitioner was justified in repudiating the claim.  District Forum overruled the objection raised by the Petitioner by its Order dated 11.1.2005, allowed the complaint and directed the Petitioner to indemnify Respondent to the extent of Rs.3,40,000/- along with interest @ 12% per annum from the date of filing of the complaint till actual payment, Rs.3500/-  were also awarded as costs.  Complainant was directed to return the salvage to the Petitioner failing which Petitioner was given liberty to reduce the   amount of compensation by Rs.1,00,000/- towards salvage.

          Petitioner being aggrieved filed Appeal before the State Commission, which has been dismissed by the impugned order.

          It may be stated here with regard to the accident in the present case legal representatives of the three inmates who had died in the accident preferred a claim  before the Motor Accident Claims Tribunal (MACT) concerned as per the Provisions of the MACT Act, 1988.  The owner of the vehicle as well as the driver were made parties besides impleading insurer in the claim proceedings.    Petitioner-Insurance Company pleaded, inter alia,  that the driver of the vehicle did not have valid and effective driving license and hence,  there was a breach of policy condition and  the corollary was that the  Insurance Company could not be fastened with the liability to pay compensation to any one in respect of the  accident referred to in the claim petition. Liakat Ali who was impleaded as 8^th respondent  had produced  the license  issued by the Licensing Authority (SDM, Paonta, Sirmaur District Himachan Pradesh) bearing No.1874-P/90 which was  the renewed license of a fake  license No. 14/RHU/93.   Liakat Ali was not examined as a witness before the MACT.  MACT  repelled  the contention of the Insurance Company, allowed the claim petition and held that  whenever a license is renewed, the Licensing Authority is required to  satisfy itself  about the genuiness of the earlier license.      There was a presumption to the effect that while renewing license of Liakat Ali the Licensing Authority must have satisfied  himself about the genuiness  of the earlier license.    Petitioner took up the matter in Appeal before the High Court.  High Court upheld the matter in Appeal.  Petitioner being aggrieved filed an Appeal before the Supreme Court.  The Supreme Court reversed the order of the High Court and the MACT by holding that  a fake license    cannot get its forgery outfit stripped off merely on account of some officer renewing  the same with or without knowing it to be  forged.    That no  licensing authority has power to renew a fake license and transform a fake license as genuine.  This judgement of the Supreme Court  titled  New India Assurance Co. vs.  Kamla & Ors. is reported in  (2001) 4  SCC 342.   The relevant observations of the Supreme Court reads as under:

“ 12. As a point of law we have no manner of doubt that a fake licence cannot get its forgery outfit stripped off merely on account of some officer renewing the same with or without knowing it to be forged. Section 15 of the Act only empowers any Licensing Authority to "renew a driving licence issued under the provisions of this Act with effect from the date of its expiry". No Licensing Authority has the power to renew a fake licence and, therefore, a renewal if at all made cannot transform a fake licence as genuine. Any counterfeit document showing that it contains a purported order of a statutory authority would ever remain counterfeit albeit the fact that other persons including some statutory authorities would have acted on the document unwittingly on the assumption that it is genuine”.

          Supreme Court after recording the aforesaid findings remitted the case to the MACT to decide as to whether    Insurance Company  which had already paid the amount to the claimants was entitled to recover that amount from the owner of the vehicle on account of vehicle being driven by a person who had no valid  license to drive the vehicle.  Para 26 of the judgement reads as under:

“26.             We may point out that as per the order passed by this Court on 6.3.2000, the appellant Insurance Company was directed to pay the award amount to the claimants.  We are told that the amount was paid by the appellant to the claimants.  Now the Claims Tribunal has to decide the next question whether the Insurance Company is entitled to recover that amount  from the owner of the vehicle on account of the vehicle being driven by a person who had no valid licence to drive the vehicle.   For that purpose we remit the case to the Claims Tribunal.   An opportunity shall be afforded to the parties concerned for adducing evidence in that regard.   We make it clear that the claimants shall not be bothered during the remaining  part of the proceedings.”

          State Commission dismissed the Appeal on the ground that firstly, MACT had held that the person driving  the vehicle was holding a valid driving license.   This finding of the State Commission cannot be accepted  as the Order passed by the MACT which was upheld by the High Court was overturned  by the Supreme Court in the case of  New India Assurance Co (supra) in which it was held that  Liakat Ali, driver of the vehicle did not  hold a valid driving license. 

State Commission relying upon  judgements of the Supreme Court  in the cases of  Skandia Insurance  Co. Ltd. vs. Kokilaben Chandravadan & Ors.- AIR 1987 SC 1184 and  United India Insurance Company Ltd. vs. Lehru & Ors. – JT 2003(2) SC 595   held that because the license had been renewed, the insurer could not avoid its liability to the insured.  The cases on which reliance has been placed by State Commission relates to the third party claim in which it has been held that the insurer could not avoid its liability to the insured.    State Commission has clearly erred in taking this view  because the judgement in those cases had been rendered in the background of Section 149 of the Motor Vehicles Act, 1988 where third party rights  were involved.  In those case it was held that any condition in the policy whereby the right of the third party is taken away would be void.  But the same would not be applicable to own damage case.  The Supreme Court after taking into consideration the entire case law in the case of National Insurance Co. Ltd. vs.  Laxmi Narain Dhut – (2007) 3 SCC 700  held:

“The inevitable           conclusion therefore is that the decision in Swaran Singh case has no application to own damage cases.   The effect of fake licence has to be considered in the light of what has been stated by this Court in New India Assurance Co. v. Kamla.  Ince the licence is a fake one the renewal cannot take away the effect of fake licence”.

           In the present case, purported  original driving license issued to the driver was found fake, it would be deemed as if the driver did not possess valid driving license.  Renewal of the fake license could not transform a fake license into a genuine license.  Since the vehicle in question was being driven by a driver in violation  of the terms of the policy as well as in violation of Section 3 of the Motor Vehicles Act, Petitioner Insurance Company was entitled to repudiate the claim.  Contract of   insurance was vitiated and Petitioner had the right to repudiate the contract of insurance.

          For the reasons stated above,  Revision Petition is allowed, orders of the Fora below are set aside and complaint is ordered to be dismissed.  No costs.