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CASE NO.: Appeal (civil)  3197 of 2005

PETITIONER: National Insurance Co. Ltd

RESPONDENT: Mrs. Kanti Devi & Ors

DATE OF JUDGMENT: 09/05/2005

BENCH: ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T (Arising out of S.L.P. (C) No.22703 of 2003)

ARIJIT PASAYAT, J.

Leave granted.

National Insurance Company Limited (hereinafter  referred to as the ’insurer’) calls in question legality of  the judgment rendered by a learned Single Judge of the Delhi  High Court dismissing the appeal filed by it.

Questioning the award made by the Motor Accident Claims  Tribunal, Karkardooma Courts, Delhi (in short ’MACT’), the  appeal was filed before the High Court. By the aforesaid  award the MACT had held that the respondent no.1 Mrs. Kanti  Devi (hereinafter referred to as the ’claimant’) was  entitled to compensation of Rs.2,24,800/- together with 8%  interest from the date of filing of claim petition under  Section 166 of the Motor Vehicles Act, 1988 (in short ’the  Act’) i.e. 30.11.1998 till realization of the award  excluding certain periods (i.e. from 30.11.1998 to 1.8.2000  and 10.9.2001 to 4.2.2002). The insurer was held liable to  compensate the claimant.   

Background facts as projected by the claimant in the  claim petition were that her son Pradeep Kumar lost his life  on 4.10.1998 on account of vehicular accident involving Tata  Tempo No. DL-1-B-8441 which was allegedly being driven  rashly and negligently by Rohani Prasad respondent no.2  (hereinafter referred to as the ’driver’). The deceased was  aged about 22 years at the time of the accident. The  offending vehicle belonged to Devender Kumar, (respondent  no.3) (hereinafter referred to as the ’insured’). Before the  Tribunal the driver and the owner did not appear.   

Stand of the insurer before the MACT was that the  driver did not possess a valid driving licence, as the  driving licence authorised driving of light motor vehicles  (private), while driver was driving a transport vehicle  (Tata Truck-407).  The MACT held that there was nothing to  show that the driving licence was fake and that plying of  the vehicle involved amounted to breach of conditions of the  insurance policy issued by the insurer.  It was held that

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the insurer was to satisfy the award, with right of recovery  from the insured. This part of observation of the MACT which  led to fastening of liability on the insurer was challenged  before the High Court. By the impugned order the High Court  dismissed the appeal holding that in view of the decision of  this Court in United India Insurance Co. Ltd. v. Lehru and  Ors. (2003 (3) SCC 338) the insurance company cannot escape  its liability to pay compensation to the claimant when it  has been given right to recover the compensation from the  insured.

In support of the appeal, learned counsel for the  appellant submitted that the High Court’s view is untenable  in view of what has been said by a three-Judge Bench  decision of this Court in National Insurance Co. Ltd. v.  Swaran Singh and Ors. (2004 (3) SCC 297). There is no  appearance on behalf of the respondents in spite of service  of notice.

In Swaran Singh’s case (supra) this Court dealt with  scope and ambit of Section 149(2)(a)(ii) vis-‘-vis proviso  appended to sub-section (4) and sub-section(5) thereof.   While dealing with cases where the driver who has been  granted licence for one type of vehicle at the relevant time  was driving another type of vehicle. In para 89 it was  observed as follows:

"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 enables the  Central Government to prescribe forms of  driving licences for various categories of  vehicles mentioned in sub-section (2) of the  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-section (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  as a person possessing a driving licence for  "motorcycle without gear", [sic may be  driving a vehicle] 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

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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 the  accident was caused solely because of some  other unforeseen or intervening causes like  mechanical failures and similar other causes  having no nexus with the 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."              

In para 101 the effect of a driving licence being found  fake was considered.  It was noted as followed:

"The submission of Mr. Salve that in  Lehru case, this Court has, for all intent  and purport, taken away the right of an  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."     

Obviously, defence can be raised by the insurer about  the licence being fake. By analogy, the insurer can also  take a defence that the driver did not have the requisite  driving licence to drive a particular type of vehicle.  Such  defence can be raised and it will be for the insurer to  prove that the insured did not take adequate care and  caution to verify genuineness or otherwise of the licence  held by the driver. The effect of the evidence in this  regard has to be considered by the concerned Tribunal.

In the instant case, the High Court did not go into the  relevant questions at all and relying on Lehru’s case  (supra) held that the insurer has to pay the amount and  recover from the insured.  It has to be noted that in Swaran  Singh’s case (supra) the earlier decision in Lehru’s case  (supra) was noted.  In para 108 of the judgment it was noted  as follows:

"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."   

The essence of Lehru’s case (supra) was delineated in  paras 92 and 100 as follows:

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"92. 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 the matter has  been considered in some detail.  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 the 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 for the owners to be absolved  from any liability whatsoever.  We would be  dealing in some detail with this aspect of  the matter a little later."

"100. This Court, however, in Lehru  must not be read to mean that an owner of a  vehicle can under no circumstances have 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 decision in Swaran Singh’s case (supra) was not  before either the MACT or the High Court when the respective  orders were passed.  Therefore, we think it proper to remit  the matter to the MACT for fresh consideration. It shall  permit the parties to lead such further evidence as they may  intend to lead.  The matter shall be decided keeping in view  the principle enunciated by this Court in Swaran Singh’s  case (supra).   

Keeping in view long pendency of the matter, the MACT  would do well to dispose of the matter within six months  from today.

The appeal is accordingly disposed of with no order as  to costs.