REPORTABLE    IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5876   OF 2008 (Arising out of SLP(C) No. 23751/2004)

UNITED INDIA INSURANCE CO.LTD. ...Appellant(s)

Versus

RAKESH KUMAR ARORA & ORS. ...Respondent(s)

O R D E R

 Delay condoned.

 Substitution allowed.

 Application for setting aside the abatement is allowed.

 Leave granted.

This appeal is directed against the judgment and order dated 20.5.2004

passed by a Division Bench of the Punjab and Haryana High court at Chandigarh

whereby and whereunder the  Letters Patent Appeal preferred by the appellant

herein from the judgment and order dated 9.10.2000 passed by the learned Single

Judge in the said F.A.No. 2627 of 1998 was dismissed.  

One Balwant Singh filed an application claiming a sum of Rs. 10,00,000/-

(Rupees Ten Lakhs) by way of compensation for death of his son Virender Singh

in

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an accident which took place on 5.2.1997.  The owner of the vehicle contested the

said claim. Appellant herein, inter alia,  raised a contention before the Tribunal

that the driver of the vehicle, namely, Karan Arora was a minor on the date of the

accident and was not holding a valid and effective  driving licence and thus it was

not liable to reimburse the owner of the vehicle.

In view of the aforementioned stand taken by the appellant inter alia the

following issue was framed:

Whether the accident resulting in death of Virender Singh alias

Rinku, took place due to rash and negligent driving of car bearing

registration No. HR41/3347 by respondent driver Karan Arora?  

While determining the said issue the learned Tribunal opined that the

Insurance Company was not liable for payment of the amount of compensation to

the claimants, stating:

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“From  the  bare  perusal  of  the  evidence  of  respondent

driver Karan Arora appearing as RW1, which has been reproduced

almost in its entirety in para nos. 19 to 22 at pages 10 to 13 of this

award, it becomes absolutely clear that he was aged about 15 years,

he does not know driving; he was born on 7.8.1983 and that he is not

having any driving  licence till  25.7.1998,  when his  statement was

recorded.   In  these  circumstances,  I  return  a  firm  finding  that

respondent  driver  Karan  Arora  had  no  valid/effective  driving

licence on the day of the accident i.e. 5.2.1997.”

An appeal under Sec.173 of the Motor Vehicles Act 1988 was filed before

the High court which was marked as  First Appeal from Order No.2627/1998.  A

learned single Judge of the said Court allowed the said appeal, holding:

“After considering the rival contentions of the parties, I

am  of  the  opinion  that  the  material  point  for  determination  is

whether there was any breach of contract between the  

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owner of the vehicle and the insurance company. If the breach is

committed  on  behalf  of  the  vehicle,  certainly  the  Insurance

Company has a case.  In order to bring the case within the mischief

of “breach” it has to be proved that there was a willful default on

the part of the insured.  I have already stated above that no sane

father would like to give the custody or keys of the vehicle to his

minor son aged 14 years much less to the friend of the minor.  Had

Rakesh Kumar Arora parted the possession of the vehicle to his son

he would have contemplated very easily that by doing so he would

have incited the trouble.  The Hon'ble Supreme Court 1987 while

interpreting the expression “Breach” came to the conclusion that if

it is proved on the record that the owner of the vehicle had done

every thing his power to keep, honour, and fulfil  the promise, in

such a situation he cannot be held guilty of a deliberate breach.

There is no evidence on the record to indicate that the owner of the

vehicle  parted  the  keys  of  the  vehicle  to  his  son  deliberately  or

knowingly.  If in the absence of the father son takes the keys of the

vehicle  and  drives  the  vehicle  for  a  fun  and  caused  accident,  it

cannot be said that there was an express or implied consent on the

part of the owner.  The judgments which have been relied upon by

the learned  

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counsel for the Insurance Company may not be any assistance  to

him for the simple reason that in the said judgments it has proved

prima facie that there was a breach of contract on the part of the

insured.”

A  Letters  Patent  Appeal  was  preferred  thereagainst,  which  was

entertained.  

The  Division  Bench  of  the  High Court  by  reason of  the   impugned

judgment dismissed the said appeal,  only relying upon or on the basis  of some

precedent, viz. V. Mepherson and another vs. Shiv Charan Singh and others 1998

ACJ 601 and Skandia Insurance Company Limited vs. Kokilaben Chandravadan

and others 1987 ACJ 411.

Mr. K.L. Nandram, learned counsel appearing on behalf of the appellant

contended  that  keeping  in  view  the  provisions  of  Secs.4  and  5  of  the  Motor

Vehicles Act 1988, the question of any willful default on the part of the owner is

wholly  irrelevant in this case as neither a  

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licence could be granted in favour of minor nor in fact the driver of the vehicle

was holding a valid licence. Reliance in this behalf has been placed on  National

Insurance Co. Ltd. vs. Kaushalaya Devi & Ors. (2008 (8) SCALE 500.

No body appears on behalf of respondent No.1.

The learned counsel appearing on behalf  of the proforma respondent-

Smt. Kaushalya Devi submitted before us that she has already received the amount

of compensation which had been deposited by the appellant.

Section 4 of the Motor Vehicles Act prohibits driving of a vehicle by any

person under the age of eighteen years in any public place.  Section 5 of the Act

imposes a statutory responsibility upon the owners of the motor vehicles not  to

cause or permit any person who does not satisfy the provisions of Sec.3 or 4 to

drive the vehicle.   

The vehicle in question admittedly was being driven by  Karan Arora

who was aged about fifteen years.  The Tribunal, as noticed hereinbefore, in our

opinion, rightly held that Karan Arora did not hold any valid licence on  

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the date of accident, namely  5.2.1997.  

The learned single Judge as also the Division Bench of the High Court

did not put unto themselves a correct question of law.  They proceeded on a wrong

premise that it was for the Insurance Company to prove breach of  conditions of

the contract of insurance.

   The High Court did not advert to itself  the provisions of Sections 4 and 5 of the

Motor Vehicles Act and thus misdirected itself in law.  

This aspect of the matter has been considered by this Court in Oriental

Insurance Co.Ltd. vs.  Prithvi Raj (2008 (1) SCALE 727) wherein upon taking into

consideration  a  large  number  of  decisions,   it  was  held  that  the  Insurance

Company was not liable, stating :

“In  the  instant  case,  the  State  Commission  has

categorically found that the evidence on record clearly established

that  the  licensing  authority  had  not  issued  any  license,  as  was

claimed by the Driver and the respondent. The evidence of Shri

A.V.V.Rajan, Junior Assistant of the Office of the Jt.  

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Commissioner & Secretary, RTA, Hyderabad who produced the

official  records  clearly  established  that  no  driving  license  was

issued  to  Shri  Ravinder  Kumar or  Ravinder  Singh  in  order  to

enable and legally permit him to drive a motor vehicle.  There was

no  cross  examination  of  the  said  witness.   The  National

Commission  also  found  that  there  was  no  defect  in  the  finding

recorded by the State Commission in this regard.”

Yet again this court in National Insurance Co.Ltd. vs. Kaushalaya Dvi &

Ors. 2008 (8) SCALE 500  took the same view stating:

“The provisions relating to  the necessity of having a licence

to drive a vehicle is contained in Section 3,4 and 10 of the Act.  As

various aspects of  the said provisions,  vis-a-vis,  the liability of the

Insurance Company to reimburse the owner in respect of a claim of a

third party as provided in Section 149 thereof have been dealt with in

several decisions, it is not necessary for us to reiterate the same once

over again.  Suffice it to notice some of the precedents operating in

the field.

In National Insurance Co. Ltd.  vs.  Swaran Singh & Ors.

[(2004) 3 SCC 297] this Court held:

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“88. 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.

89. 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  the  Central

Government  to  prescribe  forms  of  driving  licences  for  various

categories  of  vehicles  mentioned  in  sub-section  (2)  of  the  said

section.”

It was furthermore observed:

“90. 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.

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91. 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.”       

      The decision in Swaran Singh,  however, was held to be not

applicable in relation to the owner or a passenger of a vehicle which

is insured.”

In  view of  the  authoritative  pronouncement  of  this  Court  as  noticed

hereinbefore,  the  impugned  judgment  cannot  be  sustained.   It  is  set  aside

accordingly and that of   the   learned  Tribunal  is  restored.  However,

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keeping in view the admitted fact that as no stay had been granted by the High

Court  the  appellant  has  deposited  the  entire  amount  which  has  since  been

withdrawn  by  the  claimant-respondent;   we  direct  that  the  appellant  shall  be

entitled to recover the amount in question from the owner of the vehicle, namely,

respondent No.1.

The appeal is allowed accordingly.  

No costs.

                         ...................J.               (S.B. SINHA)

                  ...................J.                                         (CYRIAC JOSEPH) New Delhi, September 24, 2008.