REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  5721  OF 2008 (Arising out of S.L.P. (C) No.13174 of 2007)

National Insurance Co. Ltd. …..Appellant

Versus

Vidhyadhar Mahariwala and Ors. ….Respondents

J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. Leave granted.  

2. Challenge in this appeal is to the judgment of a learned

Single  Judge  of  the  Rajasthan  High  Court  at  Jabalpur

dismissing the appeal filed by the appellant under Section 173

of the Motor Vehicles  Act, 1988 (in short the ‘Act’). Challenge

in the  appeal  was to the  award made by the Motor Claims

Appellate  Tribunal,  Ratangarh  (Churu)  (in  short  ‘MACT)  in

Claim  Case  No.89  of  2004.  By  the  said  award,  a  sum  of

Rs.4,03,650/- was awarded to the claimant-respondent No.1

in  the  appeal.  The  dispute  related  to  the  rejection  of

appellant’s claim for exoneration on the ground of violation of

policy condition. It was pointed out that the driving license of

the driver of the offending vehicle was not in force on the date

of accident.  

3. Factual position in detail need not be indicated because

the issue relates to the liability of the insurance company as

the driving license was not valid on the date of the accident.  

4. In the instant case the date of accident was 11.6.2004.

The  driver’s  license  was  initially  valid  for  the  period  from

15.12.1997 to 14.12.2000 and thereafter from 29.12.2000 to

14.12.2003. Thereafter, it was again renewed from 16.5.2005

to 15.5.2008. The appellant filed its objections before MACT

taking the stand that since the driving license was not valid on

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the date of accident it had no liability. The MACT turned down

the plea. According to it though on the date of accident the

driving  license  was not  valid,  since  the  driver’s  license  was

renewed on 16.5.2005 for a further period of  three years it

cannot be said that during the intervening period the driver

was  incompetent  or  disqualified  to  driver  the  truck.  With

reference to Section 114 of the Indian Evidence Act, 1872 (in

short  the  ‘Evidence  Act’)  it  was  held  that  at  the  time  of

accident driver was competent to drive the vehicle.   

5. In  appeal  by  the  impugned  judgment  the  High  Court

referred  to  three  judgments  of  this  Court  in  National

Insurance Co. Ltd. v.  Swaran Singh and Ors. (2004 (3) SCC

297),  National  Insurance  Co.  Ltd.  v.  Kusum  Rai  and  Ors.

(2006  (4)  SCC  250)  and  Oriental  Insurance  Co.  Ltd. v.

Nanjappan and Ors. (2004 (13) SCC 224) and came to hold

that  the  insurance  company,  the  insurer  was  liable  to

indemnify the award. It was held that merely there was a gap

in the renewal of driving license that cannot be a ground for

exoneration.  

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6. In support of the appeal, placing reliance on the decision

of  this  Court  in  Ishwar  Chandra  and  Ors. v.  Oriental

Insurance  Co.  Ltd.  and  Ors. (2007  (10)  SCC  650),  it  was

contended that the High Court’s view is unsustainable.  

7. Learned counsel  for  respondent  No.2 the owner  of  the

vehicle on the other hand supported the judgment of MACT.  

8. In  Swaran  Singh’s case  (supra)  whereupon  the

respondent no.2 relied, it was held as follows:

“45. Thus,  a  person  whose  licence  is ordinarily  renewed  in  terms  of  the  Motor Vehicles 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 terms states that the licence remains valid for a  period  of  thirty  days  from  the  day  of  its expiry.

46. 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

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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.”

9. In Kusum Rai’s case (supra) it was held as follows:

14. This Court in Swaran Singh (2004 (3) SCC 297)  clearly laid down that the liability of the Insurance Company vis-à-vis the owner would depend upon several factors. The owner would be  liable  for  payment  of  compensation  in  a case where the driver was not having a licence at  all.  It  was  the  obligation  on  the  part  of the owner to take adequate care to see that the driver had an appropriate licence to drive the vehicle. The question as regards the liability of the  owner  vis-à-vis  the  driver  being  not possessed of a valid licence was considered in Swaran Singh stating: (SCC pp. 336-37, para 89)

“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. 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

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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 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.”

10. Nanjappan’s case (supra) was referred to in Kusum Rai’s

case (supra).

11. In  Ishwar  Chandra’s case  (supra)  the  three  decisions

referred to by the High Court were considered and it was held

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that  the  insurance  company  would  have  no  liability  in  the

case of this nature.  We are in agreement with the view. The

appeal deserves to be allowed which we direct. The impugned

order of the High Court is set aside. It is open to the claimant

to recover the amount from respondent No.2.  

……………………………..J. (Dr. ARIJIT PASAYAT)

………………………….….J. (HARJIT SINGH BEDI)

New Delhi, September 17, 2008

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