http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: KASHIRAM YADAV & ANR.

       Vs.

RESPONDENT: ORIENTAL FIRE & GEN. INSURANCE CO. & ORS.

DATE OF JUDGMENT10/08/1989

BENCH: SHETTY, K.J. (J) BENCH: SHETTY, K.J. (J) AHMADI, A.M. (J)

CITATION:  1989 AIR 2002            1989 SCR  (3) 811  1989 SCC  (4) 128        JT 1989 (3)   504  1989 SCALE  (2)343

ACT:     Motor Vehicles Act, 1939: Sec. 96--Fatal accident caused by unlicensed driver--Compensation awarded--Insurance compa- ny-Whether liable to indemnify owner of vehicle.

HEADNOTE:     A  Constable while returning home after  performing  his duties was knocked down by a tractor owned by appellant  No. 1, and driven by appellant No. 2 who had no driving licence. As  a  result of the accident, the Constable  died  and  his widow  and children claimed compensation, before the  Tribu- nal.     Awarding  a compensation of Rs.96,000 the Tribunal  held that  at  the time of the accident the vehicle  belonged  to appellant  No. 1 and was driven by appellant No. 2, who  had no driving licence, that the accident took place due to  his rash  and negligent driving, and appellant No. 1  alone  was liable to pay the compensation.     The  appellant  has come in appeal,  by  special  leave, contending that the insurer alone would be liable to pay the compensation amount, even though the tractor was not  driven by a licensed driver. Dismissing the appeal,     HELD:  1.  Section 96 of the Motor  Vehicles  Act,  1939 imposes  a duty on the insurer to satisfy judgments  against persons insured in respect of third party risks. Sub-section 2 thereof provides exception to the liability of the  insur- er.  Sub-sec. 2(b) of sec. 96 provides that the  insurer  is not  liable  to satisfy the judgments  against  the  persons insured if there has been a breach of a specified  condition of the policy. One of the conditions of the policy specified under  clause (ii) is that the vehicle should not be  driven 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. It is not in dispute that the certificate of insurance concerned in  this case  contains  this condition. If, therefore,  there  is  a breach of this condition, the insurer will not be liable  to indemnify the owner. [813C-E] 812     2. In the present case, the onus of the insurer has been

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

discharged  from  the evidence of the insured  himself.  The insured took a positive defence stating that he was not  the owner of the vehicle since he had already sold the same to a third  party. This had not been proved. Secondly, he took  a defence  stating that the vehicle at the relevant  time  was driven’  by a licensed driver. This was proved to be  false. There is no other material even to indicate that the vehicle was  entrusted  to the licensed driver on the  date  of  the fatal accident. [814D-F]     Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan and Ors., [1987] 2 SCC 654, distinguished.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 2183  of 1988.     From  the  Judgment  and Order dated  25.3.1988  of  the Allahabad High Court in F.A.F.O. No. 951 of 1987. N.D.B. Raju and N. Ganapathy for the Appellants. M.S. Ganesh and Murlidhar for the Respondents. The Judgment of the Court was delivered by     K.  JAGANNATHA  SHETTY, J. The question raised  in  this appeal  relates to the liability of the owner of an  insured vehicle  to  pay  compensation for the  accident  caused  by negligence of an unlicensed driver. The facts which are now found are these.     A  constable while returning home after  performing  his duties was knocked down by a tractor owned by appellant  no. 1--Kashiram Yadav. Appellant No. 2--Raghuraj was then  driv- ing the tractor. He had no driving licence. The widow of the constable  and  her children claimed compensation  from  the appellants  and  the insurer. The owner resisted  the  claim contending  inter alia that he had already sold the  vehicle to a third party and that vehicle was driven by the licensed driver  Gaya Prasad at the time of the accident. Both  these facts were not established. The Tribunal held that  Raghuraj Singh  was driving the tractor and the accident  took  place due  to  his rash and negligent driving and not due  to  any fault on the part of the constable. Since Raghuraj Singh had no driving licence, the Tribunal held that the 813 owner  of the vehicle alone is liable to pay  the  compensa- tion.  Having reached that conclusion, the  Tribunal  deter- mined the amount of compensation payable to the claimants. A sum of Rs.96,000 was awarded with interest at the rate of 12 per  cent  per  annum till realisation. This  award  of  the Tribunal has been affirmed by the High Court.     We  are not concerned with the quantum  of  compensation determined  by  the  Tribunal. That question  has  not  been agitated  before us. The only contention that was  canvassed before us is as to the liability of the insurer to indemnify the owner to satisfy the judgment against him.     Section 96 of the Motor Vehicles Act, 1939 imposes  duty on the insurer to satisfy judgments against persons  insured in  respect  of  third party risks.  Sub-section  2  thereof provides exception to the liability of the insurer. Sub-sec. 2(b)  of sec. 96 provides that the insurer is not liable  to satisfy  the judgments against the persons insured if  there has  been a breach of a specified condition of  the  policy. One  of the conditions of the policy specified under  clause (ii) is that the vehicle should not be driven 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. It is not in  dispute

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

that  the  certificate of insurance concerned in  this  case contains this condition. If, therefore, there is a breach of this condition, the insurer will not be liable to  indemnify the owner.     Counsel  for  the  appellants  however,  submitted  that insurer  alone would be liable to pay the award amount  even though  the tractor was not driven by a licensed driver.  In support  of the contention, he placed reliance on the  deci- sion of this Court in Skandia Insurance Co. Ltd. v.  Kokila- ben Chandravadan and Ors., [1987] 2 SCC 654. We do not think that  that decision has any relevance to the  present  case. There  the  facts found were quite different.  The.  vehicle concerned  in  that case was undisputedly entrusted  to  the driver  who  had  a valid licence.  In  transit  the  driver stopped  the vehicle and went to fetch some snacks from  the opposite shop leaving the engine on. The ignition key was at the  ignition  lock and not in the cabin of the  truck.  The driver  has asked the cleaner to take care of the truck.  In fact the driver had left the truck in the care of the clean- er.  The  cleaner meddled with the vehicle  and  caused  the accident. The question arose whether the insured (owner) had committed  a  breach of the condition  incorporated  in  the certificate  of  insurance since the  cleaner  operated  the vehicle on the fatal occasion without driving licence.  This Court expressed the view that it is 814 only  when the insured himself .entrusted the vehicle  to  a person who does not hold a driving licence, he could be said to have committed preach of the condition of the policy.  It must be established by the Insurance Company that the breach is  on  the part of the insured. Unless the  insured  is  at fault and is guilty of a breach of the condition, the insur- er  cannot escape from the obligation to indemnify  the  in- sured.  It was also observed that when the insured has  done everything within his power in as much as he has engaged the licensed  driver  and has placed the vehicle in  his  charge with  the  express or implied mandate to drive  himself,  it cannot be said that the insured is guilty of any breach.     We  affirm and reiterate the statement of law laid  down in the above case. We may also state that without the knowl- edge of the insured, if by driver’s acts or omission  others meddle  with the vehicle and cause an accident, the  insurer would  be  liable to indemnify the insured. The  insurer  in such  a  case  cannot take the defence of a  breach  of  the condition in the certificate of insurance.     But  in  the present case, the onus of the  insurer  has been  discharged from the evidence of the  insured  himself. The insured took a positive defence stating that he was  not the owner of the vehicle since he had already sold the  same to  a  third party. This has not been proved.  Secondly,  he took a defence stating that the vehicle at the relevant time was  driven by a licensed driver, Gaya Prasad, (PW-2).  This was  proved to be false:There is no other material  even  to indicate  that  the vehicle was entrusted  to  the  licensed driver on the date of the fatal accident. With these distin- guishing features in the present case, we do not think  that the  ratio of the decision in Skandia Insurance Co. Ltd.  ’s case could be called to aid the appellants.     In the result, the appeal fails and is dismissed. In the facts and circumstances of the case, we make no order as  to costs. G.N.                                       Appeal dismissed. 815

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4