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CASE NO.: Special Leave Petition (civil)  9027 of 2003

PETITIONER: National Insurance Co. Ltd.                                              

RESPONDENT: Swaran Singh & Ors.                                                    

DATE OF JUDGMENT: 05/01/2004

BENCH: CJI., V.N. Khare, D.M. Dharmadhikari & S.B. Sinha.

JUDGMENT: J U D G M E N T

     W I T H

SLP (C) 10017/03, 10042, 10055, 10510, 10787,  10829-10831, 11129/2003, SLP(C) 153/04 CC No.  4917/2003, SLP(C) 154/04 CC No. 4997/2003,  SLP(C) 156/04 CC No. 5137/2003, SLP(C) 155/04  CC No.5196/2003, SLP(C) 157/04 CC  No.5360/2003, SLP(C) 159/04 CC No. 5564/2003,  SLP(C) 356/04 CC No. 5877/2003, SLP (C) No.  9335, 9356, 9554, 9560, 9811, 9812, 9815, 9867,  9900 of 2003, 9947/2003, SLP(C) 321/04 CC No.  4686/2003, SLP(C) 160/04 CC No. 4739/2003,  SLP(C) 357/04 CC No. 4747/2003, SLP (C) No.  15528/2002 & SLP (C) No. 15772/2002

                                By V.N.Khare, CJI & D.M.Dharmadhikari, S.B. Sinha, JJ.

       Interpretation of Section 149(2)(a)(ii) vis-‘-vis the proviso appended  to sub-sections (4) and (5) of the Motor Vehicles Act, 1988 is involved in  this batch of special leave petitions filed by the National Insurance Company  Limited (hereinafter referred to as Insurer) assailing various awards of the  Motor Vehicle Claims Tribunal and judgments of the High Courts.   

       In view of the fact that these petitions involve pure questions of law, it  is not necessary to advert to the individual  fact pertaining to each matter.   

       Suffice, however, is to point out that the vehicles insured with the  petitioners were involved in accidents resulting in filing of claim  applications by the respective legal representatives of the deceased(s) or the  injured person(s), as the case may be.   

       Defences raised by the Petitioner company in the claim petitions  purported to be in terms of Section 149(2)(a)(ii) of the Motor Vehicles Act,  1988 (hereinafter referred to as ’the Act’) were : (a)  driving licence  produced by the driver or owner of the vehicle was a  fake one; (b) driver  did not have any licence whatsoever; (c) licence, although  was granted to  the concerned driver but on expiry thereof, the same had not been renewed;  (d) licence granted to the drivers being for one class or description of vehicle  but the vehicle involved in the accident was of different class or description;  and (e) the vehicle in question was driven by a person having a learner’s  licence.                           Before we proceed further in the matter it is relevant to notice certain  relevant statutory provisions which are :

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"2(10) "driving licence" means the licence issued by a  competent authority under Chapter II authorising the  person specified therein to drive, otherwise than as a  learner, a motor vehicle or a motor vehicle of any  specified class or description;

3. Necessity for driving licence. -(1) No person shall  drive a motor vehicle in any public place unless he holds  an effective driving licence issued to him authorising 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 subsection (2) of section 75 unless his driving  licence specifically entitles him so to do. (2) The conditions subject to which sub-section (1) shall  not apply to a person receiving instructions in driving a  motor vehicle shall be such as may be prescribed by the  Central Government.  4. Age limit in connection with driving of motor  vehicles. -(1) No person under the age of eighteen years  shall drive a motor vehicle in any public place:  Provided that a motor cycle with engine capacity not  exceeding 50cc may be driven in a public place by a  person after attaining the age of sixteen years.         (2) Subject to the provisions of section 18, no  person under the age of twenty years shall drive a  transport vehicle in any public place.         (3) No learner’s licence or driving licence shall be  issued to any person to drive a vehicle of the class to  which he has made an application unless he is eligible to  drive that class of vehicle under this section.  5. Responsibility of owners of motor vehicles for  contravention of sections 3 and 4. -No owner or  person in charge of a motor vehicle shall cause or permit  any person who does not satisfy the provisions of section  3 or section 4 to drive the vehicle.  6. Restrictions on the holding of driving licences. - (1) No person shall, while he holds any driving licence  for the time being in force, hold any other driving licence  except a learner’s licence or a driving licence issued in  accordance with the provisions of section 18 or a  document authorising, in accordance with the rules made  under section 139, the person specified therein to drive a  motor vehicle.         (2) No holder of a driving licence or a learner’s  licence shall permit it to be used by any other person.         (3) Nothing in this section shall prevent a licensing  authority having the jurisdiction referred to in sub-section  (1) of section 9 from adding to the classes of vehicles  which the driving licence authorises the holder to drive.  7. Restrictions on the granting of learner’s licences  for certain vehicles. (1) No person shall be granted a  learner’s licence to drive a transport vehicle unless he has  held a driving licence to drive a light motor vehicle for at  least one year.         (2) No person under the age of eighteen years shall  be granted a learner’s licence to drive a motor cycle  without gear except with the consent in writing of the  person having the care of the person desiring the learner’s  licence."

       Section 9 provides for grant of driving licence.  "9. Grant of driving licence. -(1) Any person who is  not for the time being disqualified for holding or

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obtaining a driving licence may apply to the licensing  authority having jurisdiction in the area - (i)     in which he ordinarily resides or carries on  business, or (ii)    in which the school or establishment  referred to in section 12 from where he is  receiving or has received instruction in  driving a motor vehicle is situated.  for the issue to him of a driving licence.         xxx             xxx             xxx             xxx

(7) When any application has been duly made to the  appropriate licensing authority and the applicant has  satisfied such authority of his competence to drive, the  licensing authority shall issue the applicant a driving  licence unless the applicant is for the time being  disqualified for holding or obtaining a driving licence: Provided that a licensing authority may issue a driving  licence to drive a motor cycle or a light motor vehicle  notwithstanding that it is not the appropriate licensing  authority, if the licensing authority is satisfied that there  is good and sufficient reason for the applicant’s inability  to apply to the appropriate licensing authority: Provided further that the licensing authority shall not  issue a new driving licence to the applicant, if he had  previously held a driving licence, unless it is satisfied  that there is good and sufficient reason for his inability to  obtain a duplicate copy of his former licence.         (8) If the licensing authority is satisfied, after  giving the applicant an opportunity of being heard, that  he-  (a) is a habitual criminal or a habitual drunkard; or  (b) is a habitual addict to any narcotic drug or  psychotropic substance within the meaning of the  Narcotic Drugs and Psychotropic Substances Act, 1985  (61 of 1985); or (c) is a person whose licence to drive any motor  vehicle has, at any time earlier, been revoked, it may, for reasons to be recorded in writing, make an  order refusing to issue a driving licence to such person  and any person aggrieved by an order made by a  licensing authority under this sub-section may, within  thirty days of the receipt of the order, appeal to the  prescribed authority.  (9) Any driving licence for driving a motor cycle in  force immediately before the commencement of this Act  shall, after such commencement, be deemed to be  effective for driving a motor cycle with or without gear.  10. Form and contents of licences to drive. - (1) Every  learner’s licence and driving licence, except a driving  licence issued under section 18, shall be in such form and  shall contain such information as may be prescribed by  the Central Government.         (2) A learner’s licence or, as the case may be,  driving licence shall also be expressed as entitling the  holder to drive a motor vehicle of one or more of the  following classes, namely: -  (a) motor cycle without gear;  (b) motor cycle with gear;  (c) invalid carriage;  (d) light motor vehicle;  (e) transport vehicle;  (i) road-roller;

(j)motor vehicle of a specified       description.

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14. Currency of licences to drive motor vehicles. - (1)  A learner’s licence issued under this Act shall, subject to  the other provisions of this Act, be effective for a period  of six months from the date of issue of the licence.         (2) A driving licence issued or renewed under this  Act shall. -         (a) in the case of a licence to drive a transport  vehicle, be effective for a period of three years:  Provided that in the case of licence to drive a transport  vehicle carrying goods of dangerous or hazardous nature  he effective for a period of one year and renewal thereof  shall be subject to the condition that the driver undergoes  one day refresher course of the prescribed syllabus; and

(b) in the case of any other licence,- (i) if the person obtaining the licence, either originally or  on renewal thereof, has not attained the age of fifty years  on the date of issue or, as the case may he, renewal  thereof,-  (A) be effective for a period of twenty years from the date  of such issue or renewal; or  (B) until the date on which such person attains the age of  fifty years, whichever is earlier;   (ii) if the person referred to in sub-clause (i), has attained  the age of fifty years on the date of issue or as the case  may be, renewal thereof, be effective, on payment of  such fee as may be prescribed, for a period of five years  from the date of such issue or renewal:   Provided that every driving licence shall,  notwithstanding its expiry under this subsection continue  to be effective for a period of thirty days from such  expiry,  15. Renewal of driving licences. - (1) Any licensing  authority may, on application made to it, renew a driving  licence issued under the provisions of this Act with effect  from the date of its expiry: Provided that in any case where the application for the  renewal of a licence is made more than thirty days after  the date of its expiry, the driving licence shall be renewed  with effect from the date of its renewal:  Provided further that where the application is for the  renewal of a licence to drive a transport vehicle or where  in any other case the applicant has attained the age of  forty years, the same shall be accompanied by a medical  certificate in the same form and in the same manner as is  referred to in sub-section (3) of section 8, and the  provisions of sub-section (4) of section 8 shall, so far as  may be, apply in relation to every such case as they apply  in relation to a learner’s licence. (2) An application for the renewal of a driving  licence shall be made in such form and accompanied by  such documents as may be prescribed by the Central  Government.

(3) Where an application for the renewal of a  driving licence is made previous to, or not more than  thirty days after the date of its expiry, the fee payable for  such renewal shall be such as may be prescribed by the  Central Government in this behalf.

(4) Where an application for the renewal of a  driving licence is made more than thirty days after the  date of its expiry the fee payable for such renewal shall

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be such amount as may be prescribed by the Central  Government: Provided that the fee referred to in sub-section (3) may  be accepted by the licensing authority in respect of an  application for the renewal of a driving licence made  under this sub-section if it is satisfied that the applicant  was prevented by good and sufficient cause from  applying within the time specified in sub-section (3): Provided further that if the application is made more  than five years after the driving licence has ceased to be  effective the licensing authority may refuse to renew the  driving licence unless the applicant, undergoes and  passes to its satisfaction the test of competence to drive  referred to in sub-section (3) of section 9.         (5) Where the application for renewal has been  rejected, the fee paid shall be refunded to such extent and  in such manner as may be prescribed by the Central  Government.         (6) Where the authority renewing the driving  licence is not the authority which issued the driving  licence it shall intimate the fact of Renewal to the  authority which issued the driving licence.  16. Revocation of driving licence on grounds of  disease or disability. -Notwithstanding anything  contained in the foregoing sections, any licensing  authority may at any time revoke a driving licence or  may require, as a condition of continuing to hold such  driving licence, the holder thereof to produce a medical  certificate in the same form and in the same manner as is  referred to in sub-section (3) of section 8 if the licensing  authority has reasonable grounds to believe that the  holder of the driving licence is, by virtue of any disease  or disability, unfit to drive a motor vehicle and where the  authority revoking a driving licence is not the authority  which issued the same, it shall intimate the fact of  revocation to the authority which issued that licence."

       Section 19 provides for power of the licensing authority to disqualify  from holding a driving licence or revoke such licence.

       Section 20 empowers the court to disqualify a person in the event a  person is convicted of an offence under the Motor Vehicles Act or of an  offence  in the commission of which a motor vehicle was used.            Section 21 provides for suspension of driving licence in certain cases.   Section 23 provides for effect of disqualification order.  Section 27 provides  for the power of the Central Government to make rules.

       Chapter II of the Act deals with the provisions of licensing of drivers  of motor vehicles.                  Section 147 of the Act provides for requirements of policies and limits  of liability.  Section 149 provides for the duty of insurers to satisfy  judgments and award against persons insured in respect of third party risks.  Sub-section (1) of Section 149 postulates that in the event of a certificate of  insurance has been issued in terms of Section sub-section (3) of Section 147  a judgment or award in respect of any such liability is obtained by the  insured, the insurer notwithstanding its entitlement to avoid or cancel or may  have avoided or cancelled the policy, the insurer shall, subject to the  provisions of this section, pay to the person entitled to the benefit of the  decree any sum not exceeding the sum assured payable thereunder, as if he  were the judgment debtor, in respect of the liability, together with any  amount payable in respect of costs and any sum payable in respect of interest  on that sum by virtue of any enactment relating to interest on judgments.  

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Sub-section (2) of Section 149 of the Act, however, seeks  to make an  exception thereto.  Sub-sections (4), (5) and (7) of Section 149 read thus : "(4) Where a certificate of insurance has been issued  under sub-section (3) of section 147 to the person by  whom a policy has been effected, so much of the policy  as purports to restrict the insurance of the persons insured  thereby by reference to any condition other than those in  clause (b) of sub-section (2) shall, as respects such  liabilities as are required to be covered by a policy under  clause (b) of sub-section (1) of section 147, be of no  effect:  Provided that any sum paid by the insurer in or towards  the discharge of any liability of any person which is  covered by the policy by virtue only of this sub-section  shall be recoverable by the insurer from that person.         (5) If the amount which an insurer becomes liable  under this section to pay in respect of a liability incurred  by a person insured by a policy exceeds the amount for  which the insurer would apart from the provisions of this  section be liable under the policy in respect of that  liability, the insurer shall be entitled to recover the excess  from that person.         (7) No insurer to whom the notice referred to in  sub-section (2) or sub-section (3) has been given shall be  entitled to avoid his liability to any person entitled to the  benefit of any such judgment or award as is referred to in  sub-section (1) or in such judgment as is referred to in  sub-section (3) otherwise than in the manner provided for  in subsection (2) or in the corresponding law of the  reciprocating country, as the case may be."

Sections 165 of the Act provides as under :  

"165. Claims Tribunals. - (1) A State Government may,  by notification in the Official Gazette, constitute one or  more Motor Accidents Claims Tribunals (hereafter in this  Chapter referred to as Claims Tribunal) for such area as  may be specified in the notification for the purpose of  adjudicating upon claims for compensation in respect of  accidents involving the death of, or bodily injury to,  persons arising out of the use of motor vehicles, or  damages to any property of a third party so arising, or  both.

Explanation.- For the removal of doubts, it is  hereby declared that the expression "claims for  compensation in respect of accidents involving the death  of or bodily injury to persons arising out of the use of  motor vehicles" includes claims for compensation under  section 140 [and section 163A].

(2) A Claims Tribunal shall consist of such number  of members as the State Government may think fit to  appoint and where it consists of two or more members,  one of them shall be appointed as the Chairman thereof.

(3) A person shall not be qualified for appointment  as a member of a Claims Tribunal unless he -

(a)     is, or has been, a Judge of a High Court, or

(b)     is, or has been a District Judge, or

(c) is qualified for appointment as a High Court  Judge

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[or as a District Judge].

(4) Where two or more Claims Tribunals are  constituted for any area, the State Government, may by  general or special order, regulate the distribution of  business among them."     

Section 168 of the Act provides as follows :

"168. Award of the Claims Tribunal.- On receipt of an  application for compensation made under section 166,  the Claims Tribunal shall, after giving notice of the  application to the insurer and after giving the parties  (including the insurer) an opportunity of being heard,  hold an inquiry into the claim or, as the case may be,  each of the claims and, subject to the provisions of  section 162 may make an award determining the amount  of compensation which appears to it to be just and  specifying the person or persons to whom compensation  shall be paid and in making the award the Claims  Tribunal shall specify the amount which shall be paid by  the insurer or owner or driver of the vehicle involved in  the accident or by all or any of them, as the case may be;

Provided that where such application makes a  claim for compensation under section 140 in respect of  the death or permanent disablement of any person, such  claim and any other claim (whether made in such  application or otherwise) for compensation in respect of  such death or permanent disablement shall be disposed of  in accordance with the provisions of Chapter X.

(2) The Claims Tribunal shall arrange to deliver  copies of the award to the parties concerned  expeditiously and in any case within a period of fifteen  days from the date of the award.  

(3) When an award is made under this section, the  person who is required to pay any amount in terms of  such award shall, within thirty days of the date of  announcing the award by the Claims Tribunal, deposit  the entire amount awarded in such manner as the Claims  Tribunal may direct."

Mr. Harish Salve and Mr. M.L. Verma, learned senior counsel  appearing on behalf of the insurer made the following submissions in  support of these petitions.   (1)     The insurer in terms of sub-section (2) of Section 149 of the  Act has an absolute right to raise a defence specified, inter alia,  in sub-clause (ii) of clause (a) thereof; (2)     Such a right being clear and unequivocal having regard to the  judgment of this Court in National Insurance Company Ltd.,  Chandigarh Vs. Nicolletta Rohtagi and Others [(2002) 7 SCC  456] must be allowed to be invoked by the insurer to its full  effect.  In the proceedings before the Tribunal, the insurers,  thus, were entitled to show that the vehicle involved in the  accident at the material point of time was driven by a         person who was not ’duly licensed’  or was  ’disqualified to  hold a licence’.   (3)     A person cannot be said to be ’duly licensed’  unless he has  been granted a permanent licence for driving a particular  vehicle in terms of the provisions of Chapter II of the Motor  Vehicles Act and, thus, a vehicle cannot be held to be driven by

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a person duly licensed therefor  if : (a) he does not hold a  licence; (b) he holds a fake licence; (c) he holds a licence but  the validity thereof has expired;  or (d)  he does not hold a  licence for the type of vehicle which he was driving in terms of  Chapter II of the Motor Vehicles Act, 1988, or (e) he holds  merely a learner’s licence.  Reliance in this behalf has been  placed on New India Assurance Co. Ltd. Vs. Mandar Madhav  Tambe and Others [(1996) 2 SCC 328] and United India  Insurance Co. Ltd.  vs. Gian Chand and Others [(1997) 7 SCC  558]. (4)     Once the defence by the insurer is established in the  proceedings before the Tribunal, it is bound to discharge the  insurer and fix the liability only on the owner and/or the driver  of the vehicle.   (5)     Once it is held that the insurer has been able to establish its  defence, the Tribunal or the Court cannot direct the insurance  companies to pay the awarded amount to the claimant and in  turn recover the same from the owner and the driver of the  vehicle.   

The decisions of this Court in New India Assurance Co., Shimla vs.  Kamla and Others etc. [(2001) 4 SCC 342] and United India Insurance  Company Ltd. vs. Lehru and Others [(2003) 3 SCC 338] wherein it has been  held that the court is entitled to issue a direction upon the insurer  to satisfy  the award and thereafter recover the same from the owner of the vehicle do  not lay down the correct law and should be overruled.

The learned counsel appearing on behalf of the respondents, who are  third party claimants on the other hand, submitted:

(i)     that the Parliament deliberately used two different expressions  ’effective licence’ in Section 3 and ’duly licensed’ in sub-section  (2) of Section 149 of the Act which are suggestive of the fact  that a driver once licensed, unless he is disqualified, would  continue to be a duly licensed person for the purpose of Chapter  XI of the Act.   (ii)    Thus, once a person has been duly licensed but has not renewed  his licence, the same would not come within the purview of  Section 149 and thus would not constitute a statutory defence  available to the insurer in terms thereof.  Only in the event of  lapse of five years from the date of expiry of  the licence, such  statutory defence may be raised.   (iii)   Once a certificate of insurance is issued in terms of the  provisions of the Act, the insurer has a liability to satisfy an  award.  It has been pointed that a major departure has been  made in the 1988 Act insofar as in terms of Section 96(2)(b) of  the 1939 Act all the statutory defences were available in terms  of  sub-section (3) thereof provided that the policy conditions  other than those prescribed therein had no effect; whereas in the  new Act, Section 149(2)(a) prescribes that the policy is void if  it is obtained by non-disclosure of material fact.  Section 149(4)  confines to only clause (b) and states that the conditions of  policy except as mentioned in clause (b) of sub-section (2) are  of no effect and, thus, after the amendment, except in cases  which are covered under clause (b) of Section 149, the  insurance companies are liable to pay to the third parties.  In  other words, the right of insurer to avoid the claim of the third  party would arise only when the policy is obtained by  misrepresentation of material fact and fraud and in no other  case.   (iv)    Sub-section (1) of Section 149 makes it clear that the insurer  should pay first to the third parties  and recover the same if they  are absolved on any of the grounds specified in sub-section (2)

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thereof.  Reliance, in this connection, has been placed on BIG  Insurance Co. Ltd. vs. Captain Itbar Singh and Others [AIR  1959 SC 1331] and New India Assurance Company Vs. Kamla  & Others [(2001) 4 SCC 342]. (v)     The burden to prove the defence raised by the insurers as regard  the question as to whether there has been any breach of  violation of policy conditions of the insurance policy has been  issued or not, would be upon the insurer. (vi)    The breach on the part of the insured must be a wilful one being  of fundamental condition  by the insured himself and the  burden of proof,   therefore, would be on the insurer.   (vii)   With a view to avoid its liabilities  it is not sufficient for the  insurer to show that the person driving at the time of accident  was not duly licensed but it must further be established that  there was a breach on the part of the insured.  Reliance, in this  connection, has been placed on Narcinva V. Kamath and  Another vs. Alfredo Antonio Doe Martins and Others [(1985) 2  SCC 574], Skandia Insurance Company Ltd. vs. Kokilaben  Chandevadan and Others [(1987) 2 SCC 654], Sohan Lal Passi  vs. P. Sesh Reddy and Others [(1996) 5 SCC 21] and United  India Insurance Company Ltd. vs. Lehru & Others [(2003) 3  SCC 338].   

       Before we deal with various contentions raised by the parties it is  desirable to look into the legislative history of the provisions for its  interpretation. The relevant provisions of the Act indisputably are beneficent  to the claimant.  They are in the nature of a Social Welfare Legislation.

Chapter XI of the Motor Vehicles Act, 1988, inter alia, provides for  compulsory insurance of vehicles in relation to the matters specified  therefor.  The provision for compulsory insurance indisputably has been  made inter alia with a view to protect the right of a third party.   

       This Court in Sohan Lal Passi (supra) noted:

"10. The road accidents in India have touched a new  height. In majority of cases because of the rash and  negligent driving, innocent persons become victims of  such accidents because of which their dependants in  many cases are virtually on the streets. In this  background, the question of payment of compensation in  respect of motor accidents has assumed great importance  for public as well as for courts. Traditionally, before the  Court directed payment of tort compensation, it had to be  established by the claimants that the accident was due to  the fault of the person causing injury or damage. Now  from different judicial pronouncements, it shall appear  that even in western countries fault is being read and  assumed as someone’s negligence or carelessness. The  Indian Parliament, being conscious of the magnitude of  the plight of the victims of the accidents, have introduced  several beneficial provisions to protect the interest of the  claimants and to enable them to claim compensation  from the owner or the insurance company in connection  with the accident."

The intention of the Parliament became further evident when in the  Motor Vehicles Act, 1939, a new chapter being Chapter VIIA dealing with  insurance of motor vehicles against third party risks was introduced and the  beneficent provisions contained in the Motor Vehicles Act, 1939 were  further made liberal by reason of the Motor Vehicles Act, 1988 and the  amendments carried out therein from time to time in aid of the third party  claims by way of grant of additional or new rights conferred on the road  accident victims.

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       Under the common law a person injured by reason of another person’s  wrongdoing had no right of action against insurers who undertook to  indemnify the wrongdoer.  The first invasion of this principle took place by  reason Third Parties (Rights against Insurers) Act, 1930.  The British  Parliament in the light of the aforementioned Act enacted the Road Traffic  Act, 1930 which has since been replaced by Road Traffic Act, 1988.  

The Third Parties (Rights Against Insurers) Act 1930 was enacted  with a view to correct injustice effecting a statutory assignment of the rights  of the assured to the injured person as prior thereto the right of a person to  be indemnified under a contract of insurance against claims made against  him by persons whom he might have injured was one personal to himself,  and there was no privity of any sort between the injured person and the  insurers.  The injured person had no interest either at law or in equity in the  insurance money, either before or after it was paid by the insurers to the  assured.   In a case where the assured became bankrupt and if the injured  person had not already obtained judgment and levied execution of his claim  for damages his only right was to move in the bankruptcy or the winding-up  of proceedings. The beneficial provisions of the aforementioned English  statutes were incorporated by the Parliament of India while enacting the  Motor Vehicles Act, 1939 which has also since been repealed and replaced  by the Motor Vehicles Act, 1988.     

Concededly different types of insurance covers are issued containing  different nature of contract of insurance.  We are, however, in this batch of  cases mainly concerned with third party right under the policy.  Any  condition in the insurance policy, whereby the right of the third party is  taken away, would be void.

       Indisputably such a benefit to a third party was provided under the  Statute keeping in view the fact that the conditions in the assured’s policy  may not be of no or little effect in relation to a claim by a person to whom an  assured was under a compulsorily insurable liability.   In this context, it is necessary to consider as to what is a third party  right.  A third party claim arises when a victim of an accident suffers a  bodily injury or death as a result thereof or his property is damaged.  An  accident is not susceptible to a very precise definition.  

       The popular and ordinary sense of the word was "an unlooked-for  mishap or an untoward event which is not expected or designed".            In R. Vs. Morris [(1972) 1 W.L.R. 228], the Court of Appeal defined  the word as an "unintended occurrence which has an adverse physical  result".   The Supreme Court of Canada in Pickford & Black Ltd. vs.  Candian General  Insurance Co. [(1976) 2 Lloyd’s Rep. 108], stated the law  thus :- "The meaning to be attached to the word  "accident" as employed in the body of an insurance  policy was thoroughly explored by Mr. Justice Pigeon in  the reasons for judgment which he delivered on behalf of  the majority of this Court in The Canadian Indemnity Co.  v. Walkem Machinery & Equipment Ltd., (1975) D.L.R.  (3d) 1.  In the course of these reasons at p. 5 he adopted  the views expressed by Mr. Justice Freedman, in a  dissenting opinion in the Court of Appeal of Manitoba in  Marshall Wells of Canada Ltd. v. Winnipeg Supply and  Fuel, R. Litz & Sons Co. v. Candian General Insurance  Co., (1964) 49 W.W.R. 644 at p. 665 where that learned  Judge said :

With respect, I am of the view that what  occurred  here  was  an  accident.  One must avoid  the danger of construing that term as if it were  equivalent to "inevitable accident."  That a mishap  might have been avoided by the exercise of greater

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care and diligence does not automatically take it  out of the range of accident.  Expressed another  way, "negligence" and "accident" as here used are  not mutually exclusive terms.  They may co-exist.

After expressing the view that even an occurrence  which is the result of a calculated risk or of a dangerous  operation may come within the meaning of the word  "accident", Mr. Justice Pigeon went on to say at p. 6 :

While it is true that the word "accident" is  sometimes used to describe unanticipated or unavoidable  occurrences, no dictionary need be cited to show that in  every day use, the word is applied as Halsbury says...to  any unlooked for mishap or occurrence...this is the proper  test..."  

       In Halsbury’s Laws of England, Fourth Edition Reissue, it is stated:

"An injury caused by the willful or even criminal act of  a third person, provided the assured is not a party or  privy to it, is to be regarded as accidental for the  purposes of the policy, since from the assured’s point of  view it is not expected or designed."                    In Colinvaux’s Law of  Insurance (6th Edition) page 304, the  following illustration is given :

"If a man walks and stumbles, thus spraining his  ankle, the injury is accidental for while he intends to  walk he does not intend to stumble.  In Hamlyn v. Crown  Accidental Insurance the assured’s injury was due to  stooping forward to pick up a marble dropped by a child  as it rolled from him.  He stood with his legs together,  separated his knees, leaned forward and made a grab at  the marble, and in doing so wrenched his knee.  The  injury was held by the Court of Appeal to be accidental,  on the ground that the assured did not intend to get into  such a position that he might wrench his knee."  

       At  para 17-13 of the said treatise it is stated :

                "Accident includes negligence          It makes no difference that the accident was caused  by the negligence of the assured (as opposed to his  intentional act).  Thus there is an accident where the  assured crosses a railway line without exercising due care   and is knocked down by an approaching train.  In fact,  one of the commonest causes of accidents is negligence,  and an accident policy applies, excepted perils apart,  whether the injury is caused by the negligent act of the  assured himself or of a third party."   

       A right of the victim of a road accident to claim compensation is a  statutory one.  He is a victim of an unforeseen situation.  He would not  ordinarily have a hand in it.  The negligence on the part of the victim may,  however, be contributory.  He has suffered owing to wrongdoing of others.   An accident  may ruin an entire family.  It may take away the only earning  member.  An accident may result in the loss of her only son to a mother.  An  accident may take place for variety of reasons.  The driver of a vehicle may

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not have a hand in it.  He may not be found to be negligent in a given case.   Other factors such as unforeseen situation, negligence of the victim, bad  road or  the action or inaction of any other person may lead to an accident.           A person suffering grievous bodily injury may require money for his  survival/medical treatment.  Statutory compensation paid to the next of kin  of the victim of an accident may, thus, bring to a large number of families  the only ray of light at the end of the tunnel.   

       In other words, what would also be covered by the contract of  insurance vis-‘-vis the beneficent statutory provisions like Sub-Section (2)  of Section 149 of the said Act would be when a death or bodily injury has  been caused as a result of assured’s own voluntary act.  Even an  unforeseeable result of assured’s deliberate act may come within the  purview of the accident.  Even if an accident has occurred due to negligent  driving of the assured person, it may not prevent recovery under the policy  and certainly thereby a third party would not be non-suited.

However, we may notice that in C.M. Jaya’s case (supra), a  Constitution Bench of this Court held that the liability of the insurer will  have to be determined having regard to the question as to whether any extra  premium is paid or not.   It was observed :

"...The said decision cannot be read as laying down that  even though the liability of the Insurance Company is  limited to the statutory requirement, an unlimited or  higher liability can be imposed on it.  The liability could  be statutory or contractual.  A statutory liability cannot  be more than what is required under the statute itself.   However, there is nothing in Section 95 of the Act  prohibiting the parties from contracting to create  unlimited or higher liability to cover wider risk.  In such  an event, the insurer is bound by the terms of the contract  as specified in the policy in regard to unlimited or higher  liability as the case may be.  In the absence of such a  term or clause in the policy, pursuant to the contract of  insurance, a limited statutory liability cannot be  expanded to make it unlimited or higher.  If it is so done,  it amounts to rewriting the statute or the contract of  insurance which is not permissible."    

For the aforementioned reasons, the provisions contained in Chapter  XI of the Motor Vehicles Act, 1988 must be construed in that light.   

Sub-section (1) of Section 149, casts a liability upon the insurer to pay   to the person entitled to the benefit of the decree as if he were the judgment  debtor.  Although the said liability is subject to the provision of this section,   it prefaces with a non-obstante clause that the insurer may be entitled to  avoid or cancel or may have avoided or cancelled the policy.  Furthermore,  the statute raises a legal fiction to the effect that for the said purpose the  insurer would be deemed to be judgment debtor in respect of the liability of  the insurer.   

In Halsbury’s Laws of England, Fourth Edition Reissue, Volume 25,  it is stated:

"743. Benefits conferred on third parties by the Road  Traffic Act, 1930. It was against the background of the  Third Parties (Rights against Insurers) Act 1930 that the  Road Traffic Act 1930 (now replaced by the Road Traffic  Act 1988), was passed.  It was realised that, unless some  alterations were made in the rights to which the third  party was by the first-named Act subrogated, those rights  would frequently be of little, if any, value.  Accordingly,

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it was provided that certain conditions in the assured’s  policy were to be of no effect in relation to a claim by a  person to whom an assured was under a compulsorily  insurable liability.  The conditions to that extent avoided  are any conditions providing (1) that no liability is to  arise, or (2) that any liability which has arisen is to cease,  in the event of some specified thing being done, or  omitted to be done, after the occurrence of the event  giving rise to the claim.  If, therefore, any admission of  liability is made after an accident contrary to a condition  in the policy, or if, contrary to a condition in the policy,  proper notice of the accident is not given to the insurers,  the injured third party is not affected so far as his claim is  concerned."

This Court in  Nicolletta Rohtagi (supra) which has since been  followed in Sadhana Lodh Vs. National Insurance Company Ltd. and Anr.  reported in [(2003) 1 SCR 567] in no uncertain terms held that the defence  available to an insurance company would be a limited one.   

       The question as to whether an insurer can  avoid its liability in the  event it raises a defence as envisaged in Sub-section (2) of Section 149 of  the Act corresponding to sub-section (2) of Section 96 of the Motor Vehicles  Act, 1939 had been the subject matter of decisions in a large number of  cases.   

       It is beyond any doubt or dispute that under Section 149(2) of the Act  an insurer, to whom notice of the bringing of any proceeding for  compensation has been given, can defend the action on any of the grounds  mentioned therein.

However, Clause (a) opens with the words "that there has been a  breach of a specified condition of the policy", implying that the insurer’s   defence of the action would depend upon the terms of the policy.  The said  sub-clause contains three conditions of  disjunctive character, namely, the  insurer can get away  from the liability when (a) a named person drives the  vehicle; (b) it was being driven by a person who did not have a duly granted  licence; and (c) driver is a person disqualified for holding or obtaining a  driving licence.   

We may also take note of the fact that whereas in Section 3 the words  used are ’effective  licence’, it has been differently worded in Section 149(2)  i.e. ’ duly licensed’.  If a person does not hold an effective licence as on the  date of the accident, he may be liable for prosecution in terms of Section 141  of the Act but Section 149 pertains to insurance as regard  third party risks.   

A provision of a statute which is penal in nature vis-‘-vis a provision  which is beneficent to  a third party must be interpreted differently.  It is also  well known that the provisions contained in different expressions are  ordinarily construed differently.   

The words ’effective licence’ used in Section 3, therefore, in our  opinion cannot be imported for sub-section (2) of Section 149 of the Motor  Vehicles Act.  We must also notice that the words ’duly licensed’ used in  sub-section (2) of Section 149 are used in past tense.  

Thus, a person whose licence is ordinarily renewed in terms of the  Motor Vechiles Act and the rules framed thereunder despite the fact that  during the interregnum period, namely,  when the accident took place and  the date of expiry of the licence,  he did not have a valid licence,  he could  during the prescribed period apply for renewal thereof and could obtain the  same automatically without undergoing any further test or without having  been declared unqualified therefor.  Proviso appended to Section 14 in  unequivocal term states that the licence remains valid for a period of thirty

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days from the day of its expiry.  

Section 15 of the Act does not empower the authorities to reject an  application for renewal only on the ground that there is a break in validity or  tenure of the driving licence has lapsed as in the meantime the provisions for  disqualification of the driver contained in Sections 19, 20, 21, 22, 23 and 24  will not be attracted, would indisputably confer a right upon the person to  get his driving licence renewed.  In that view of the matter he cannot be said  to be delicensed and the same shall remain valid for a period of thirty days  after its expiry.

If a person has been given a licence for a particular type of vehicle as  specified therein, he cannot be said to have no licence for driving another  type of vehicle which is of the same category but of different type.  As for  example when a person is granted a licence for driving a light motor vehicle  he can drive either a car or a jeep and it is not necessary that he must have  driving licence both for car and jeep separately.

Furthermore, the insurance company with a view to avoid its  liabilities is not only required to show that the conditions laid down under  Section 149(2)(a) or (b) are satisfied but is further required to establish that  there has been a breach on the part of the insured.  By reason of the  provisions contained in the 1988 Act, a more extensive remedy has been  conferred upon those who have obtained judgment against the user of a  vehicle and  after  a certificate of insurance is delivered in terms of  Section  147(3)  a third party has obtained a judgment against any person insured by  the policy in respect of a liability required to be covered  by Section 145, the  same must be satisfied  by the insurer, notwithstanding that the insurer may  be entitled to avoid or to cancel the policy or may in fact  have done so.    The same obligation applies in respect of a judgment  against a person not  insured by the policy in respect of such a liability, but who would have been  covered if the policy had covered the liability of all persons, except that in  respect of liability for death or bodily injury.    

Such a breach on the part of  the insurer must be established by the  insurer to show that not only the insured used or caused or permitted to  be  used the vehicle in breach of the Act but also that the damage he suffered  flowed from the breach.   

Under the Motor Vehicles Act, holding of a valid driving licence is  one of the conditions of contract of insurance.  Driving of a vehicle without  a valid licence is an offence.  However, the question herein is whether a  third party involved in an accident is entitled to the amount of compensation  granted by the Motor Accidents Claims Tribunal although the driver of the  vehicle at the relevant time might not have a valid driving licence but would  be entitled to recover the same from the owner or driver thereof.   

It is trite that where the insurers relying upon the provisions of  violation of law by the assured takes an exception to pay the assured or a  third party, they must prove a wilful violation of the law by the assured.  In  some cases violation of criminal law, particularly, violation of the provisions  of the Motor Vehicles Act may result in absolving the insurers but, the same  may not necessarily hold good in the case of a third party.  In any event, the  exception applies only to acts done intentionally or "so recklessly as to  denote that the assured did not care what the consequences of his act might  be".

In Narvinva’ case (supra), a Division Bench of this Court observed :

"...The insurance company complains of breach of a term  of contract which would permit it to disown its liability  under the contract of insurance.  If  a breach of term of   contract  permits a party to the contract to not to perform

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the contract, the burden is squarely on that party which  complains of breach to prove that the breach has been  committed by the other party to the contract.  The test in  such a situation would be who would fail if no evidence  is led..."  

In Skandia’s case (supra), this Court held :

"Section 96(2)(b)(ii) extents immunity to the insurance  company if a breach is committed of the condition  excluding driving by a named person or persons or by  any person who is not duly licensed, or by any person  who has been disqualified from holding or obtaining  driving licence during the period of disqualification. The  expression "breach" is of great significance. The  dictionary meaning of "breach" is "infringement or  violation of a promise or obligation" (See Collins English  Dictionary). It is, therefore, abundantly clear that the  insurer will have to establish that the insured is guilty of  an infringement or violation of the promise that a person  who is duly licensed will have to be in charge of the  vehicle. The very concept of infringement or violation of  the promise that the expression "breach" carries within  itself induces an inference that the violation or  infringement or violation. If the insured is not at all at  fault and has not done anything he should not have done  or is not amiss in any respect, how can it be  conscientously posited that he has committed a breach ?  It is only when the insured himself places the vehicle in  charge of a person who dies not hold a driving licence,  that it can be said that he is "guilty" of the breach of the  promise that the vehicle will be driven by a licensed  driver. It must be established by the insurance company  that the breach was on the part of the insured and that it  was the insured who was guilty of violating the promise  or infringement of the contract. Unless the insured is at  fault and is guilty of a breach, the insurer cannot escape  from the obligation to indemnify the insured and  successfully contented that he is exonerated having  regard to the fact that the promisor (the insured)  committed a breach of his promise. Not when some  mishap occurs by some mischance. When the insured has  done everything within his power inasmuch as he has  engaged a licensed driver and has placed the vehicle in  charge of a licensed driver, with the express or implied  mandate to drive it himself, it cannot be said that the  insured is guilty of any breach."

In B.V. Nagaraju vs. M/s Oriental Insurance Co. Ltd. [AIR 1996 SC  2054],  Punchhi, J. speaking for the Division Bench followed Skandia  (supra) and read down  the exclusionary term of the insurance policy to  serve the main purpose  thereof, holding :

"The National Commission went for the strict  construction of the exclusion clause. The reasoning that  the extra passengers being carried in the goods vehicle  could not have contributed, in any manner, to the  occurring of the accident, was barely noticed and rejected  sans any plausible account; even when the claim  confining the damage to the vehicle only was limited in  nature.  We, thus, are of the view in accord with the  Skandia’s case (AIR 1987 SC 1184), the aforesaid  exclusion term of the insurance policy must be read down

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so as to serve the main purpose of the policy that is  indemnify the damage caused to the vehicle, which we  hereby do."   

A contract of insurance also falls within the realm of contract.  Thus,  like any other contract, the intention of the parties must be gathered from the  expressions used therein.                   Ivamy in his treatise ’Fire and Motor Insurance’ (2nd Edition) at page  272-273 narrated an interesting case concerning Employment of "under age"  driver in Sweeney vs. Kennedy [(1948), 82, L.I.L. Rep. 294 at 297] as under :

       "In Sweeney vs. Kennedy the proposer in answer  to a question stating "Are any of your drivers under  twenty-one years of age or with less than twelve months’  experience" replied "No".  One of the lorries covered by  the policy was involved in an accident whilst it was being  unloaded, and a third pqrty was fatally injured.  At the  time of the accident it was being driven by the insured’s  son, who had twelve months’ driving experience but was  under twenty-one.  When a claim for an indemnity was  made against the insurance company, payment was  refused on the ground that the employment of a driver  under twenty-one years of age amounted to such an  alteration in the character of the risk as would avoid the  policy.

       Kingsmill Moore, J., giving judgment in the Eire  Divisional Court, rejected this argument and held that the  company was liable.  He said that whether a change of  risk was so great as to avoid an insurance must always be  a question of degree and a question of the opinion of the  Court on the circumstances of the case.  He could see a  vast difference between the risks involved in insuring a  merchantman and a privateer; a smaller but still very  substantial difference between the risk involved in  insuring an explosive and non-explosive demolition; and  a very exiguous difference between the risks of insuring  when a driver was under or over twenty-one.

               He then observed  :

       "The law provides that licences to drive  motor vehicles may be given to persons of  specified ages, the ages varying with the class of  the vehicle; and when a person is driving a vehicle  of the category which by his age he is entitled to  drive, there is, I think, some presumption that, as  far as age reflects on competency, he is competent  to drive it.  Certainly this would be an honest and  reasonable view for an insured person to take in a  case where he had not been expressly limited by  the terms of the policy to the employment of  drivers over 21.  Certain  categories of vehicles   may not, by law, be driven by persons under 21,  and as the framework of the proposal form was apt  to cover an application for insurance  of such  vehicle, he might reasonably consider that Q.9 was  designed to all attention to this fact.  If insurers  take a different view as to the proposer age of  drivers from the view of the law, it is open to them  - indeed, I would say incumbent upon them - to  make this clear by the insertion of specific  provisions in the policy and not attempt to secure

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their ends by a side wind.  I hold that there was no  such alteration in the subject-matter of the  insurance as would or could avoid the policy."       

In the event the terms and conditions of policy are obscure it is  permissible for the purpose of construction of the deed to look to the  surrounding circumstances as also the conduct of the parties. In   Oriental  Insurance  Co.  Ltd.  vs. Sony  Cheriyan [(1999) 6 SCC  451], it has been held :

"The insurance policy between the insurer and the  insured represents a contract between the parties.  Since  the insurer undertakes to compensate the loss suffered by  the insured on account of risks covered by the insurance  policy, the terms of the agreement have to be strictly  construed to determine the extent of liability of the  insurer.  The insured cannot claim anything more than  what is covered by the insurance policy.  That being so,  the insured has also to act strictly in accordance with the  statutory limitations or terms of the policy expressly set  out therein."

Yet in Oriental Insurance Co. Ltd. vs. Samayanallur Primary  Agricultural Co-op. Bank  [AIR 2000 SC 10], this Court laid down the law  in the following terms :

"The State Commission appreciated the real controversy  between the parties and decided the dispute on  interpretation of the insurance policies and the proposal  produced before the District Forum.  There was no  necessity of referring to the dictionaries for  understanding the meaning of the word ’safe’ which the  parties in the instant case are proved to have understood  while submitting the proposal and accepting the  insurance policy.  The cashier’s box could not be equated  with the safe within the meaning of the insurance policy.    The alleged burglary and the removal of the cash box  containing the jewellery and cash was not covered by the  insurance policy between the parties.  The insurance  policy has to be construed having reference only to the  stipulations contained in it and no artificial far fetched  meaning could be given to the words appearing in it."

The courts also readily apply the doctrine of waiver in favour of the  insured and against the insurer.           The insurer’s liability arises both from contract as well as statute.  It  will, therefore, may not be proper to apply the rules for interpretation of a  contract for interpreting a statute.

The correctness of the decision rendered in Skandia’s case (supra) was  questioned and the matter was referred to a three-Judge Bench to which we  shall advert to a little later.   

Gian Chand’s case (supra) relied  on behalf of the petitioner is of not  much assistance.  Therein this Court was dealing with peculiar fact situation  obtaining therein.  In that case the insured admittedly did not have any  driving licence and in that situation, the insurance company was  held to be  not liable.  The Bench noticed the purported conflict between the two sets of  decisions but did not refer the matter to a larger Bench.  It merely  distinguished the cases on their own facts stating :

"Under the circumstances, when the insured had

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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 accident caused by such  unlicensed driver.  In  view of the aforesaid two sets of decisions of this Court,  which deal with different fact situations, it cannot be said  that the decisions rendered by this Court in Skandia  Insurance Co. Ltd. v. Kokiolaben Chandravadan and the  decision of the Bench of three  learned Judges in Sohan  Lal in any way conflict with the decisions rendered by  this Court in the cases of New India Assurance Co. Ltd.  vs. Mandar Madhav Tambe and Kashiram Yadav v.  Oriental Fire & General Insurance Co."           

There may be a case where an accident takes place without there  being fault on the part of the driver.  In such an event, the question  as to  whether a driver was holding a valid licence or not  would become  redundant.  (See  Jitendra Kumar vs. Oriental Insurance Co. Ltd. & Anr. -   J.T. 2003 (5) SC 538].   

Skandia (supra), on the other hand,  has been approved by a three- Judge Bench, when the correctness thereof was referred to a larger Bench in   Sohan Lal Passi’s case (supra), wherein a three-Judge Bench of this Court  noticed the ratio propounded in  Skandia’s  case (supra) and observed : "...In other words, once there has been a contravention of  the condition prescribed in sub-section (2)(b)(ii) of  Section 96, the person insured shall not be entitled to the  benefit of sub-section (1) of Section 96. According to us,  Section 96(2)(b)(ii) should not be interpreted in a  technical manner. Sub-section (2) of Section 96 only  enables the insurance company to defend itself in respect  of the liability to pay compensation on any of the  grounds mentioned in sub-section (2) including that there  has been a contravention of the condition excluding the  vehicle being driven by any person who is not duly  licensed. This bar on the face of it operates on the person  insured. If the person who has got the vehicle insured has  allowed the vehicle to be driven by a person who is not  duly licensed then only that clause shall be attracted. In a  case where the person who has got insured the vehicle  with the insurance company, has appointed a duly  licensed driver and if the accident takes place when the  vehicle is being driven by a person not duly licensed on  the basis of the authority of the driver duly authorised to  drive the vehicle whether the insurance company in that  event shall be absolved from its liability ? The expression  ’breach’ occurring in Section 96(2)(b) means  infringement or violation of a promise or obligation. As  such the insurance company will have to establish that  the insured was guilty of an infringement or violation of  a promise. The insurer has also to satisfy the Tribunal or  the Court that such violation or infringement on the part  of the insured was wilful. If the insured has taken all  precautions by appointing a duly licensed driver to drive  the vehicle in question and it has not been established  that it was the insured who allowed the vehicle to be  driven by a person not duly licensed, then the insurance  company cannot repudiate its statutory liability under  sub-section (1) of Section 96..."  

       A bare perusal of the provisions of Section 149 of the Act leads to  only one conclusion that usual rule is that once the assured proved that the  accident is covered by the compulsory insurance clause, it is for the insurer

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to prove that it comes within an exception.   

       In MacGillivray on Insurance Law it is stated:

"25-82 Burden  of Proof:           Difficulties may arise in  connection with the burden of proving that the facts of  any particular case fall within this exception.  The usual  rule is that once the assured has proved that the case  comes within the general risk, it is for the insurers to  prove that it comes within an exception.  It has therefore  been suggested in some American decisions that, where  the insurers prove only that the assured exposed himself  to danger and there is no evidence to show why he did so,  they cannot succeed, because they have not proved that  his behaviour was voluntary or that the danger was  unnecessary.  Since an extremely heavy burden is  imposed on the insurers if they have to prove the state of  mind of the assured, it has been suggested in Canadian  decisions that the court should presume that the assured  acted voluntarily and that, where he does an apparently  dangerous and foolish act, such danger was unnecessary,  until the contrary is shown.  In practical terms, therefore,  the onus does in fact lie on the claimant to explain the  conduct of the assured where there is not apparent reason  for exposing himself to an obvious danger."

In Rukmani and Others vs. New India Assurance Co. Ltd. and Others  [1999 ACJ 171], this Court while upholding the defences available to the  insurer to the effect that vehicle in question was not being driven by a person  holding a licence, held that the burden of the insurer would not be  discharged when the evidence which was brought on record was that the  Inspector of Police in his examination in chief merely stated,  "My enquiry  revealed that the respondent No.1 did not produce the  licence to drive the  abovesaid scooter.  The respondent No.1 even after my demand did not  submit the licence since he was not having it."     

The proposition of law is no longer res integra that the person who  alleges breach must prove the same.  The insurance company is, thus,  required to establish the said breach by cogent  evidence.  In the event, the  insurance company fails to prove that there has been breach of  conditions of  policy on the part of the insured, the insurance company cannot be absolved  of its liability. (See Sohan Lal Passi (supra)  

Apart from the above, we do not intend to lay down anything further  i.e. degree of proof which would satisfy the aforementioned requirement  inasmuch as the same would indisputably depend upon the facts and  circumstances of each case.  It will also depend upon the terms of contract of  insurance .  Each case may pose different problem which must be resolved  having to a large number of factors governing the case including conduct of  parties as regard duty to inform, correct disclosure, suppression, fraud on the  insurer etc.  It will also depend upon the fact as to who is the owner of the  vehicle and the circumstances in which the vehicle was being driven by a  person having no valid and effective licence.  No hard and fast rule can  therefor be laid down.  If in a given case there exists sufficient material to  draw an adverse inference against either the  insurer or the insured, the  Tribunal may do so.   The parties alleging breach must be held to have   succeeded in establishing the breach of conditions of contract of insurance  on the part of the insurer by discharging its burden of proof.  The Tribunal,  there cannot be any doubt, must  arrive at a finding on the basis of the  materials available on records.   

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In the aforementioned backdrop, the provisions of sub-sections (4)  and (5) of  Section 149 of the Motor Vehicles Act, 1988 may be considered  as the liability of the Insurer to satisfy the decree at the first instance.

A beneficent statute, as is well known, must receive a liberal  interpretation [See Bangalore Water Supply & Sewerage Board etc. vs. A.  Rajappa and Others etc. [(1978) 2 SCC 213],  Steel Authority of India Ltd.  and Others vs. National Union Waterfront Workers and Others  [(2001) 7  SCC 1],  ITI Ltd. vs. Siemens Public Communications Network Ltd. [(2002)  5 SCC 510], Amrit Bhikaji Kale and Others vs. Kashinath Janardhan Trade  and Another [(1983) 3 SCC 437] and Kunal Singh vs. Union of India and  Another [(2003) 4 SCC 524].

The liability of the insurer is a statutory one.  The liability of the  insurer to satisfy the decree passed in favour of a third party is also statutory.

In Halsbury’s Laws of England, Fourth Edition Reissue, Volume 25,  it is stated:

"749. Judgments required to be satisfied. The first  condition of the obligation of the insurers to pay on a  judgment is that there is a judgment.

The Second condition is that the judgment must be  in respect of a liability which is required to be covered by  compulsory insurance.  In other words, the only person  who can maintain a right of action direct against the  insurers is a person falling within the class of third  parties whose bodily injury or death or damage to whose  property is required to be covered by a motor policy.

The third condition is that the liability is, in fact,  covered by the terms of the policy, or would be covered  but for the fact that the insurer is entitled to avoid or  cancel, or has avoided or cancelled, the policy.  For this  purpose, conditions declared to be invalid as against a  third party are ignored, but if, even after ignoring all such  conditions, the relevant use of the vehicle puts it outside  the scope of the policy, the insurers are left immune.  The  most important clause in this connection is the  ’description of use’ clause.  The assured is criminally  liable if he uses his car for purposes outside the scope of  his insurance and, in addition to his criminal liability, he  has to bear unaided the cost of compensating third parties  injured by his use if he is negligent.  Subject to the  statutory provision rendering certain conditions invalid  against third parties, the insurers are not obliged to carry  a wider scope of liability that they have agreed by their  policy to carry.

The fourth condition is that the judgment must be  against a person insured by the policy.  This language  covers a permitted driver as well as the person by whom  the policy has been effected."

       As has been held in Sohan Lal Passi  (supra), the insurance company  cannot shake off its liability to pay the compensation  only by saying that at  the relevant point of time the vehicle was driven by a person having no  licence.  

       Thus, where a liability has been established by a judgment, it is not  permissible to look beyond the determination in order to establish the basis  of the liability.

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       In United Insurance Co. Ltd. Vs. Jaimy and others [1998 ACJ 1318],  it is stated:

       "Section 149(2) relates to the liability of the  insurer and speaks of a situation in regard to which no  sum shall be payable by an insurer to whom notice of  bringing of any such proceeding is given, could defend  the action stated in the said statutory provision.  The  contention in the context would be found in section  149(2)(a) in the event of a breach of a specified condition  of the policy enabling the insurer to avoid liability in  regard thereto.  In the process in regard to the right of the  insurer to recover the amount from the insured, it would  have to be seen by referring to section 149(4)  successfully recovered from the insured.

       Section 149(4) says that where a certificate of  insurance is issued, so much of the said policy as  purports to restrict the insurance of the persons insured  thereby by referring to any of the conditions mentioned  and it is precisely enacted in regard thereto and that the  liability covered by section 2(b) as are required to be  covered by the policy would not be available.  The  position is made further clear by the provisions enacting  that any sum paid by the insurer in or towards the  discharge of any liability of any person who is covered  by the policy by virtue of this sub-section shall be  recoverable by the insurer from that person.

       In other words, section 149(4) considers the right  of the insurance company in regard to re-imbursement of  the amount paid by them only in the context of a situation  other than the one contemplated under Section 149(2)(b).   It would mean that except under the situation provided by  section 149(2)(b), the insurer would not be in a position  to avoid the liability because he has got rights against the  owner under the above provision.

       The learned counsel strenuously submitted that this  would not be the correct understanding and interpretation  of the statutory provisions of section 149 of the 1988 Act.   The learned counsel submitted that to read the statutory  provision to understand that the insurance company could  only claim from the owner in situations governed by  section 149(2)(b) and to have no right under the said  provision with regard to other situations under section  149(2)(a) would not be the proper reading of the statutory  provision.  The learned counsel submitted that in fact the  provision would have to be meaningfully understood.  It  is not possible to consider the submission of the learned  counsel in the light of the plain language of the statutory  provision.  It is necessary to emphasise that under the  new Act the burden of the insurance company has been  made heavier in the context of controlling the need of  taking up contentions to legally avoid the liabilities of the  insurance company."

 The social need of the victim being compensated as enacted by the  Parliament was the subject matter of consideration before a three-Judge  Bench of this Court as early as in 1959 in British India General Insurance  Co. Ltd. vs. Captain Itbar Singh and Others [(1960) 1 SCR 168], wherein  Sarkar, J speaking for the Bench observed :   

"Again, we find the contention wholly  unacceptable.  The Statute has no doubt created a liability

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in the insurer to the injured person but the statute has also  expressly confined the right  to avoid that liability to  certain grounds specified in it.  It is not for us to add to  those grounds and therefore to the statute for reasons of  hardship.  We are furthermore not convinced that the  statute causes any hardship.  First, the insurer has the  right, provided he has reserved it by the policy, to defend  the action in the name of the assured and if he does so, all  defences open to the assured can then be urged by him  and there is no other defence that he claims to be entitled  to urge.  He can thus avoid all hardship if any,  by  providing for a right to defend the action in the name of  the assured and this he has full liberty to do.  Secondly, if  he has been made to pay something which on the contract  of the policy he was not bound to pay, he can under the  proviso to sub-s.(3) and under sub-s.(4) recover it from  the assured.  It was said that the assured might be a man  of straw  and the insurer might not be able to recover  anything from him.  But the answer to that is that it is the  insurer’s bad luck.  In such circumstances the injured  person also would not have been able to recover the  damages suffered by him from the assured, the person  causing the injuries...

Similar view has been taken in Skandia’s case (supra), Sohan Lal  Passi’s case (supra), Kashiram Yadav and Another vs. Oriental Fire and  General Insurance Co. Ltd. and Others [(1989) 4 SCC 128] and several  others.

In Kamla’s case (supra), a Division Bench of this Court summed up  the legal position :   "The position can be summed up thus :  The insurer and the insured are bound by the conditions  enumerated in the policy and the insurer is not liable to  the insured if there is violation of any policy condition.  But the insurer who is made statutorily liable to pay  compensation to third parties on account of the certificate  of insurance issued shall be entitled to recover from the  insured the amount paid to the third parties, if there was  any breach of policy conditions on account of the vehicle  being driven without a valid driving licence. Learned  counsel for the insured contended that it is enough if he  establishes that he made all due enquiries and believed  bona fide that the driver employed by him had a valid  driving licence, in which case there was no breach of the  policy condition. As we have not decided on that  contention it is open to the insured to raise it before the  Claims Tribunal. In the present case, if the Insurance  Company succeeds in establishing that there was breach  of the policy condition, the Claims Tribunal shall direct  the insured to pay that amount to the insurer. In default  the insurer shall be allowed to recover that amount  (which the insurer is directed to pay to the claimant third  parties) from the insured person."            The submissions made on behalf of the petitioner may now be  noticed.  According to the learned counsel, sub-section (4) of Section 149  deals with the situation where the insurer in the policy purports to restrict the  insurance of the persons insured thereby by reference to any condition other  than those in clause (b) of sub-section (2) of Section 149 and in that view of  the matter no liability is covered for driving of a vehicle without licence or   fake licence.   The submission ignores the plain and unequivocal expression  used in sub-section (2) of Section 149 as well as the proviso appended  thereto.  With a view to construe a statute the scheme of the Act has to be

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taken into consideration.  For the said purpose the entire Act has to be read  as a whole and then chapter by chapter, section by section and word by  word.  [See Reserve Bank of India etc. vs. Peerless General Finance and  Investment Co. Ltd. and others [(1987) 1 SCC 424  Para 33].                   Proviso appended to sub-section (4) of Section 149 is referable only to  sub-section (2) of Section 149 of the Act.  It is an independent provision and  must be read in the context of Section 96(4) of the Motor Vehicles Act,  1939.  Furthermore, it is one thing to say that the insurer will be entitled to  avoid its liability owing to  breach of  terms of  a contract of insurance but it  is another thing to say that the vehicle is not insured at all.  If the submission  of the learned counsel for the petitioner is accepted, the same would render  the proviso to sub-section (4) as well as sub-section (5) of Section 149 of the  Act otiose, nor any effective meaning can be attributed to the liability clause  of the insurance company contained in sub-section (1).   The decision in  Kamla’s case (supra) has to be read in the aforementioned context.           Sub-section (5) of Section 149 which imposes a liability on the insurer  must also be given its full effect.  The insurance company may not be liable  to satisfy the decree and, therefore, its liability may be zero but it does  mean  that it did not have initial liability at all.  Thus, if the insurance company is  made liable to pay any amount, it can recover the entire amount paid to the  third party on behalf of the assured.  If this interpretation is not given to the  beneficent provisions of the Act having regard to its  purport and object, we  fail to see a situation where beneficent provisions can be given effect to.    Sub-section (7) of Section 149 of the Act, to which pointed attention of the  Court has been drawn by the learned counsel for the petitioner, which is in  negative language may now be noticed.  The said provision must be read  with sub-section (1) thereof.  The right to avoid liability in terms of sub- section (2) of Section 149 is restricted as has been discussed hereinbefore.    It is one thing to say that the insurance companies are entitled to raise a  defence but it is another thing to say that despite the fact that its defence has  been accepted having regard to the facts and circumstances of the case,  the  Tribunal has power to direct them to satisfy the decree at the first instance  and then direct recovery of the same from the owner.   These two matters  stand  apart and require contextual reading.  WHEN ADMITTEDLY NO LICENCE WAS OBTAINED BY A DRIVER:

       We have analysed the relevant provisions of the said Act in terms  whereof a motor vehicle must be driven by a person having a driving  licence.  The owner of a motor vehicle in terms of Section 5 of the Act has a  responsibility to see that no vehicle is driven except by a person who does  not satisfy the provisions of Section 3 or 4 of the Act.  In a case, therefore,  where the driver of the vehicle  admittedly did not hold any licence and the  same was allowed consciously  to be driven by the owner of the vehicle by  such person, the insurer is entitled to succeed in its defence and avoid   liability.  The matter, however, may be different where a disputed question  of fact arises as to whether the driver had a valid licence or where the owner  of the vehicle committed a breach of the terms of the contract of insurance  as also the provisions of the Act by consciously allowing any person to drive  a vehicle who did not have a valid driving licence.   In a given case, the  driver of the vehicle may not have any hand at all, e.g. a case where an  accident takes place owing to a mechanical fault or vis-major. [See Jitendra  Kumar (supra)]   In V. Mepherson vs. Shiv Charan Singh [1998 ACJ 601 (Del.)] the  owner of the vehicle was held not to be guilty of violating the condition of  policy by willfully permitting his son to drive the car who had no driving  licence at the time of accident. In that case, it was held that the owner and  insurer both were jointly and severally liable. In New India Assurance Co. Ltd. vs. Jagtar Singh and Others  [1998  ACJ 1074], Hon’ble M. Srinivasan, CJ, as His Lordship then was, dealing  with the case where a duly licensed driver was driving a vehicle but there  was a dispute as to who was driving the vehicle.   In that case the court  referred to the judgment in Kashiram Yadav vs. Oriental Fire & General  Insurance Co. Ltd. [1989 ACJ 1078 (SC)] and expressed its agreement with  the views taken therein.         In National Insurance Co. Ltd. vs. Ishroo Devi and Others [1999 ACJ

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615] where there was no evidence that the society which employed the  driver was having knowledge that the driver was not holding a valid licence,  it was held the insurance company is liable.  The court relied upon the  decisions of this Court in Kashiram Yadav’s case (supra), Skandia’s case  (supra) and Sohan Lal Passi’s case (supra).  WHEN THE PERSON HAS BEEN GRANTED LICENCE FOR ONE  TYPE OF VEHICLE BUT AT THE RELVANT TIME HE WAS DRIVING  ANOTHER TYPE OF VECHILE :  

       Section 10 of the Act provides for forms and contents of licences to  drive.  The licence has to be granted in the prescribed form.  Thus, a licence  to drive a light motor vehicle would entitle the holder there to drive the  vehicle falling within that class or description.   

       Section 3 of the Act casts an obligation on a driver to hold an effective  driving licence for the type of vehicle which he intends to drive. Section 10  of the Act enables Central Government to prescribe forms of driving  licences for various categories of vehicles mentioned in sub-section (2) of  said section.  The various types of vehicles described for which a driver may  obtain a licence for one or more of them are (a) Motorcycle without gear, (b)  motorcycle with gear, (c) invalid carriage, (d) light motor vehicle, (e)  transport vehicle, (f) road roller and (g) motor vehicle of other specified  description.  The definition clause in Section 2 of the Act defines various  categories of vehicles which are covered in broad types mentioned in sub- sectionh (2) of Section 10.  They are ‘goods carriage’, ‘heavy-goods vehicle’,  ‘heavy passenger motor-vehicle’, ‘invalid carriage’, ‘light motor-vehicle’,  ‘maxi-cab’,‘medium goods vehicle’, ‘medium passenger motor-vehicle’,  ‘motor-cab’, ‘motorcycle’, ‘omnibus’, ‘private service vehicle’, ‘semi-trailer’,  ‘tourist vehicle’, ‘tractor’, ‘trailer’, and ‘transport vehicle’. In claims for  compensation for accidents, various kinds of breaches with regard to the  conditions of driving licences arise for consideration before the Tribunal.  A  person possessing a driving licence for ‘motorcycle without gear’, for which  he has no licence. Cases may also arise where a holder of driving licence for  ‘light motor vehicle’ is found to be driving a ‘maxi-cab’, ‘motor-cab’ or  ‘omnibus’ for which he has no licence. In each case on evidence led before  the tribunal, a decision has to be taken whether the fact of the driver  possessing licence for one type of vehicle but found driving another type of  vehicle, was the main or contributory cause of accident. If on facts, it is  found that accident was caused solely because of some other unforeseen or  intervening causes like mechanical failures and similar other causes having  no nexus with driver not possessing requisite type of licence, the insurer will  not be allowed to avoid its liability merely for technical breach of conditions  concerning driving licence.                   We have construed and determined the scope of sub-clause (ii) of sub- section(2) of section 149 of the Act. Minor breaches of licence conditions,  such as want of medical fitness certificate, requirement about age of the  driver and the like not found to have been the direct cause of the accident,  would be treated as minor breaches of inconsequential deviation in the  matter of use of vehicles.  Such minor and inconsequential deviations with  regard to licensing conditions would not constitute sufficient ground to deny  the benefit of coverage of insurance to the third parties.  

       On all pleas of breach of licensing conditions taken by the insurer, it  would be open to the tribunal to adjudicate the claim and decide inter se  liability of insurer and insured; although where such adjudication is likely to  entail undue delay in decision of the claim of the victim, the tribunal in its  discretion may relegate the insurer to seek its remedy of reimbursement from  the insured in the civil court.   WHERE THE DRIVER’S LICENCE  IS FOUND TO BE  FAKE :         It may be true as has been contended on behalf of the petitioner that a  fake or forged licence is as good as no licence but the question herein, as  noticed hereinbefore, is whether the insurer must prove  that the owner was  guilty of the wilful breach of the conditions of the insurance policy or the  contract of insurance.  In Lehru’s case (supra), the matter has been

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considered at some details.  We are  in general agreement with the approach  of the Bench but we intend to point out that the observations made therein  must be understood to have been made in the light of  the requirements of  law in terms whereof the insurer is to establish wilful breach on the part of  the insured and not for the purpose of its disentitlement from raising any  defence or the owners be absolved from any liability whatsoever.  We would  be dealing in some details with this aspect of the matter a little later.    LEARNER’S LICENCE : Motor Vehicles Act, 1988 provides for grant of learner’s licence.   [See  Section 4(3), Section 7(2), Section 10(3) and Section 14].  A learner’s  licence is, thus, also a licence within the meaning of the provisions of the  said Act.  It cannot, therefore, be said that a vehicle when being driven by a  learner subject to the conditions mentioned in the licence, he would not be a  person who is not duly licensed resulting in conferring a right on the insurer  to avoid the claim of the third party.  It cannot be said that a person holding  a learner’s licence is not entitled to drive the vehicle.  Even if there exists a  condition in the contract of insurance that the vehicle cannot be driven by a  person holding a learner’s licence, the same would run counter to the  provisions of Section 149(2) of the said Act.

The provisions contained in the said Act provide also for grant of  driving licence which is otherwise a learner’s licence.  Section 3(2) and 6 of  the Act provides for the restriction in the matter of grant of driving licence,  Section 7 deals with such restrictions on granting of learner’s licence.   Section 8 and 9 provide for the manner and conditions for grant of driving  licence.  Section 15 provides for renewal of driving licence.  Learner’s  licences are granted under the rules framed by the Central Government or  the State Governments in exercise of their rule making power.  Conditions  are attached to the learner’s licences granted in terms of the statute.  A  person holding learner’s licence would, thus, also come within the purview  of "duly licensed" as such a licence is also granted in terms of the provisions  of the Act and the rules framed thereunder.  It is now a well-settled principle  of law that rules validly framed become part of the statute.  Such rules are,  therefore, required to be read as a part of main enactment.  It is also well- settled principle of law that for the interpretation of statute an attempt must  be made to give effect to all provisions under the rule.  No provision should  be considered as surplusage.  

Mandar Madhav Tambe’s case (supra), whereupon the learned  counsel  placed reliance, has no application to the fact of the matter.  There  existed an exclusion clause in the insurance policy wherein it was made  clear that the Insurance Company, in the event of an accident, would be  liable only if the vehicle was being driven by a person holding a valid  driving licence or a permanent driving licence "other than a learner’s  licence".  The question as to whether such a clause would be valid or not did  not arise for consideration before the Bench in the said case.  The said  decision was rendered in the peculiar fact situation obtaining therein.   Therein it was stated that "a driving licence" as defined in the Act is  different from a learner’s licence issued under Rule 16 of the Motor  Vehicles Rules, 1939 having regard to the factual matrix involved therein.

       The question which arises for consideration in these petitions did not  arise there. Neither the same were argued at the Bar nor the binding  precedents were considered.  Mandar Madhav Tambe’s case (supra),  therefore, has no application to the facts of these cases nor create any  binding precedent.  The view we have  taken is in tune with the judgments  rendered by different High Courts consistently. [See for example New India  Assurance Co. Ltd. Vs. Latha Jayaraj and others [1991 ACJ 298].

CONFLICT OF DECISIONS :            Contention of Mr. Salve that there exists a conflict in the decisions of  this Court in Nicolletta Rohtagi (supra) on the one hand and Kamla (supra)  and Lehru (supra) on the other cannot be accepted.  We do not find in the  said decisions any such conflict.

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Nicolletta Rohtagi (supra) was a case where a question arose as to  whether an appeal by the insurer on the ground de’hors those contained in  Section 149(2) would be maintainable.  It was held not to be.   There cannot  be any doubt or dispute that defences enumerated in Section 149(2)  would  be available to the insurance companies, but that does not and cannot mean  that despite such defences  having not been established, they would not be  liable to fulfil their statutory obligation under sub-section (1) of Section 149  of the Act.

       So far as the purported conflict in the judgments of Kamla (supra) and  Lehru (supra) is concerned, we may wish to point out that the defence to the  effect that the licence held by the person driving the vehicle was a fake one,  would be available  to the insurance companies, but whether despite the  same,  the plea of default on the part of the owner has been established or  not would be a question which will have to be determined in each case.   

       The court, however, in Lehru (supra) must not read that an owner of a  vehicle can under no circumstances has any duty to make any enquiry in this  respect. The same, however, would again be a question which would arise  for consideration in each individual case.  The submission of Mr. Salve that in Lehru’s case (supra), this Court  has, for all intent and purport, taken away the right of insurer to raise a  defence that the licence is fake does not appear to be correct.  Such defence  can certainly be raised but it will be for the insurer to prove that the insured  did not take adequate care and caution to verify the genuineness or otherwise  of the licence held by the driver.   Our attention has also been drawn on an unreported order of this  Court in Malla Prakasarao vs. Malla Janaki & Ors. (Civil Appeal No. 163 of  1996 disposed of on 6th August, 2002) which reads as under : "It is not disputed that the driving licence of the driver of  the vehicle had expired on 20th November, 1982 and the  driver did not apply for renewal within 30 days of the  expiry of the said licence, as required under Section 11 of  the Motor Vehicles Act, 1939.  It is also not disputed that  the driver of the vehicle did not have driving licence  when the accident took place.  According to the terms of  contract, the Insurance Company has no liability to pay  any compensation where an accident takes places by a  vehicle driven by a driver without driving licence.  In that  view of the matter, we do not find any merit in the  appeal.

       The appeal fails and is, accordingly dismissed.   There shall be no order as to costs".    In that case, the Court presumably as in the case of  Mandar Madhav  Tambe’s case (supra), was concerned with the terms and conditions of the  contract of insurance. Before the Court, no occasion arose to consider the  general terms and condition of the contract of insurance vis-‘-vis liability of  insurance under the Motor Vehicles Act.   CONCLUSION:         It is, therefore, evident from the discussions made hereinbefore that  the liability of the insurance company to satisfy the decree at the first  instance and to recover the awarded amount from the owner or driver thereof  has been holding the field for a long time.   

Apart from the reasons stated hereinbefore the doctrine of stare  decisis persuades us not to deviate from the said principle.

It is well-settled rule of law and should not ordinarily be deviated  from.  (See The Bengal Immunity Company Limited Vs. the State of Bihar  and Others [1955] 2 SCR 603 at 630-632, Keshav Mills Co. Ltd. Vs.  Commissioner of Income-Tax, Bombay North [1965] 2 SCR 908 at 921- 922, Union of India & Anr. Vs. Raghubir Singh (Dead) By LRs. etc. [1989]  3 SCR 316 at 323, 327, 334, M/s. Gannon Dunkerley and Co. and Others  Vs. State of Rajasthan and Others (1993) 1 SCC 364, Belgaum Gardeners

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Cooperative Production Supply and Sale Society Ltd. Vs. State of  Karanataka 1993 Supp (1) SCC 96, Hanumantappa Krishnappa Mantur and  Others Vs. State of Karnataka [1992 Supp (2) SCC 213].

We may, however, hasten to add that the Tribunal and the court must,  however, exercise their jurisdiction to issue such a direction upon  consideration of the facts and circumstances of each case and in the event  such a direction has been issued despite arriving at a finding of fact to the  effect that the insurer has been able to establish that the insured has  committed a breach of contract of insurance as envisaged under sub-clause  (ii) of clause (a) of sub-section (2) of Section 149 of the Act, the insurance  company shall be entitled to realise the awarded amount from the owner or  driver of the vehicle, as the case may be, in execution of the same award  having regard to the provisions of Sections 165 and 168 of the Act .   However, in the event, having regard to the limited scope of inquiry in the  proceedings before the Tribunal it had not been  able to do so, the insurance  company may initiate a separate action therefor against the owner or the  driver of the vehicle or both, as the case may be.  Those exceptional cases  may arise when the evidence becomes available to or comes to the notice of  the insurer at a subsequent stage or for one reason or the other, the insurer  was not given opportunity to defend at all.  Such a course of action may also  be resorted when a fraud or collusion between the victim and the owner of  the vehicle is detected or comes to the knowledge of the insurer at a later  stage.    

Although, as noticed hereinbefore, there are certain special leave  petitions wherein the persons having the vehicles at the time when the  accidents took place did not hold any licence at all, in the facts and  circumstances of the case, we do not intend to set aside the said awards.   Such awards  may also be satisfied by the petitioners herein subject to their  right to recover the same from the owners of the vehicles in the manner laid  down therein.  But this order may not be considered as a precedent.

Although in most of the case, we have not issued notices in view of  the fact that the question of law has to be determined;  we have heard  counsel  for the parties at length at this stage.        

SUMMARY OF FINDINGS :            The summary of our findings to the various issues as raised in these  petitions are as follows: (i)     Chapter XI of the Motor Vehicles Act, 1988 providing compulsory  insurance of vehicles against third party risks is a social welfare  legislation to extend relief by compensation to victims of accidents  caused by use of motor vehicles.  The provisions of compulsory  insurance coverage of all vehicles are with this paramount object  and the provisions of the Act have to be so interpreted as to  effectuate the said object. (ii)    Insurer is entitled to raise a defence in a claim petition filed under  Section 163 A or Section 166 of the Motor Vehicles Act, 1988  inter alia in terms of Section 149(2)(a)(ii) of the said Act.  (iii)   The breach of policy condition e.g., disqualification of driver or  invalid driving licence of the driver, as contained in sub-section  (2)(a)(ii) of section 149, have to be proved to have been committed  by the insured for avoiding liability by the insurer.  Mere absence,  fake or invalid driving licence or disqualification of the driver for  driving at the relevant time, are not in themselves defences  available to the insurer against either the insured or the third  parties.  To avoid its liability towards insured, the insurer has to  prove that the insured was guilty of negligence and failed to  exercise reasonable care in the matter of fulfilling the condition of  the policy regarding use of vehicles by duly licensed driver or one  who was not disqualified to drive at the relevant time.  (iv)    The insurance companies are, however, with a view to avoid their  liability must not only establish the available defence(s) raised in  the said proceedings but must also establish ’breach’ on the part of

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the owner of the vehicle; the burden of proof wherefor would be on  them. (v)     The court cannot lay down any criteria as to how said burden  would be discharged, inasmuch as the same would depend upon  the facts and circumstance of each case.   (vi)    Even where the insurer is able to prove breach on the part of the  insured concerning the policy condition regarding holding of a  valid licence by the driver or his qualification to drive during the  relevant period, the insurer would not be allowed to avoid its  liability towards insured unless the said breach or breaches on the  condition of driving licence is/ are so fundamental as are found to  have contributed to the cause of the accident.  The Tribunals in  interpreting the policy conditions would apply "the rule of main  purpose" and the concept of "fundamental breach" to allow  defences available to the insured under section 149(2) of the Act. (vii)   The question as to whether the owner has taken reasonable care to  find out as to whether the driving licence produced by the driver,  (a fake one or otherwise), does not fulfil the requirements of law or  not will have to be determined in each case. (viii)  If a vehicle at the time of accident was driven by a person having a  learner’s licence, the insurance companies would be liable to  satisfy the decree. (ix)    The claims tribunal constituted under Section 165 read with  Section 168 is empowered to adjudicate all claims in respect of the  accidents involving death or of bodily injury or damage to property  of third party arising in use of motor vehicle.  The said power of  the tribunal is not restricted to decide the claims inter se between  claimant or claimants on one side and insured, insurer and driver  on the other.  In the course of adjudicating the claim for  compensation and to decide the availability of defence or defences  to the insurer, the Tribunal has necessarily the power and  jurisdiction to decide disputes inter se between insurer and the  insured.  The decision rendered on the claims and disputes inter se  between the insurer and insured in the course of adjudication of  claim for compensation by the claimants and the award made  thereon is enforceable and executable in the same manner as  provided in Section 174 of the Act for enforcement and execution  of the award in favour of the claimants. (x)     Where on adjudication of the claim under the Act the tribunal  arrives at a conclusion that the insurer has satisfactorily proved its  defence in accordance with the provisions of section 149(2) read  with sub-section (7), as interpreted by this Court above, the  Tribunal can direct that the insurer is liable to be reimbursed by the  insured for the compensation and other amounts which it has been  compelled to pay to the third party under the award of the tribunal.   Such determination of claim by the Tribunal will be enforceable  and the money found due to the insurer from the insured will be  recoverable on a certificate issued by the tribunal to the Collector  in the same manner under Section 174 of the Act as arrears of land  revenue.  The certificate will be issued for the recovery as arrears  of land revenue only if, as required by sub-section (3) of Section  168 of the Act the insured fails to deposit the amount awarded in  favour of the insurer within thirty days from the date of  announcement of the award by the tribunal. (xi)    The provisions contained in sub-section (4) with proviso  thereunder and sub-section (5) which are intended to cover  specified contingencies mentioned therein to enable the insurer to  recover amount paid under the contract of insurance on behalf of  the insured can be taken recourse of by the Tribunal and be  extended to claims and defences of insurer against insured by  relegating them to the remedy before regular court in cases where  on given facts and circumstances adjudication of their claims inter  se might delay the adjudication of the claims of the victims.   

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       For the reasons aforementioned, these petitions are dismissed but  without any order as to costs.