REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 44 OF 2003

NEW INDIA ASSURANCE CO.  LTD. … APPELLANT

VERSUS

SURESH CHANDRA AGGARWAL … RESPONDENT

J U D G M E N T

D.K. JAIN, J.

1. This appeal, by special leave, is directed against order dated 3rd April,  

2002,  passed  by  the  National  Consumer  Disputes  Redressal  

Commission  at  New  Delhi  (for  short  “the  National  Commission”),  

whereby the Revision Petition filed by the appellant—The New India  

Assurance Company Ltd., has been dismissed and order passed by  

the District Consumer Redressal Forum, Betul (for short “the District  

Forum”),  directing  payment  of  compensation  to  the  respondent  

(hereinafter referred to as “the claimant”)  as affirmed by the Madhya

Pradesh State Consumer Disputes Redressal Commission at Bhopal  

(for short “the State Commission”) has been upheld.

2. Briefly stated, the material facts giving rise to the appeal are:

On 31st May, 1991 the claimant, the sole respondent in this appeal,  

obtained from the appellant, a comprehensive insurance policy in respect  

of his Maruti Saloon 800 car. The policy was valid from 31st May, 1991 to  

30th May,  1992.  Unfortunately,  on  29th February,  1992,  the  insured  

vehicle  met  with  an  accident  resulting  in  the  death  of  the  driver  and  

extensive damage to the car. On 3rd March, 1992, the claimant lodged a  

claim of Rs.1,00,000/- with the appellant for total loss of the vehicle.

3. The appellant appointed a surveyor to assess the damage caused to  

the car. On the recommendation of the surveyor, the driving licence of  

the deceased driver was got verified from the office of the Regional  

Transport Authority (Licensing), Bhopal. The certificate issued by the  

said authority showed that the driving licence of the deceased driver  

was valid from 26th October, 1988 to 25th October, 1991 and then from  

23rd March,  1992  to  22nd March,  1995.  On  receipt  of  the  said  

verification report, the appellant repudiated the claim of the claimant  

on  the  ground  that  the  driver  of  the  vehicle  was  not  holding  an  

effective driving licence at the time of accident as his licence was valid  

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only  up  to  25th October,  1991,  which  had  been  renewed  by  the  

licensing authority only with effect from 23rd March, 1992 whereas the  

accident took place on 29th February, 1992.

4. Being aggrieved by the said decision of the appellant,  the claimant  

filed  a  complaint  before  the  District  Forum,  Betul  claiming  a  

compensation  of  Rs.1,00,000/-.   The  claim  was  contested  by  the  

appellant  on  the  ground  that  there  was  a  breach  of  one  of  the  

conditions in the insurance policy inasmuch as the accidental vehicle  

was being driven by a person who, at the time of accident, did not  

hold  an  effective  driving  licence.  The  District  Forum,  upon  

consideration  of  the  rival  contentions  of  the  parties,  accepted  the  

complaint  and  directed  the  appellant  to  pay  Rs.1,00,000/-  to  the  

claimant as compensation for damage to the car, besides costs.

5. Aggrieved by the order passed by the District Forum, the appellant as  

well as the claimant preferred appeals to the State Commission. The  

stand  of  the  appellant  was  that  they  were  not  liable  to  pay  any  

compensation because the vehicle was being driven by a person who  

did not have an effective licence at the time of accident whereas the  

grievance of the claimant was with regard to the inadequacy of the  

compensation awarded. The State Commission found that although  

the licence of the deceased driver was valid up to 25th October, 1991  

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but the same had been renewed subsequently and, therefore, since  

he had not been disqualified to hold such a licence, the claim of the  

claimant could not be rejected on the ground that the licence had not  

been renewed on time. The compensation awarded was also held to  

be adequate. Accordingly, both the appeals were dismissed.

6. Not being satisfied with the approach of the State Commission, the  

appellant  preferred  a  Revision  Petition  before  the  National  

Commission.  Following  the  decision  of  this  Court  in  Ashok  

Gangadhar Maratha Vs. Oriental Insurance Co. Ltd.1, the National  

Commission,  as noted above,  dismissed the Revision Petition.  It  is  

this order which is under challenge in this appeal.

7. Ms. Kiran Suri, learned counsel appearing on behalf of the appellant,  

submitted that all the three Fora committed a manifest error of law in  

holding that there was deficiency in service by the appellant and it was  

liable to  pay compensation to  the claimant.  It  was argued that  the  

National  Commission  has  failed  to  appreciate  that  on  the  date  of  

accident, the vehicle in question was being driven by a person who  

was  not  holding  an  effective  driving  licence.  Merely  because  the  

driving  licence,  which  had  expired  on  25th October,  1991  i.e., four  

months prior to the date of accident, was renewed subsequently with  

1 (1999) 6 SCC 620

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effect from 23rd March, 1992, it could not be said that on the date of  

accident,  the  driver  was  holding  an  effective  driving  licence  as  

stipulated in special condition No.5 of the cover note issued on 31st  

May, 1991. It was also contended that the ratio of the decision of this  

Court in the case of  Ashok Gangadhar  (supra), relied upon by the  

National Commission, was not applicable on the facts of the present  

case.  It was pointed out that the issue arising in this appeal is no  

longer res-integra and stands concluded in favour of the appellant by  

the decision of this Court in National Insurance Co. Ltd. Vs. Jarnail   

Singh & Ors.2. In support of the proposition that the issue involved in  

the case of Ashok Gangadhar (supra) was entirely different and as a  

matter  of  fact  the  decision  in  that  case  was  rendered  on  its  own  

peculiar facts, the learned counsel placed reliance on the decision of  

this Court in New India Assurance Company Ltd. Vs. Prabhu Lal3.   

Learned counsel pleaded that since the claimant had failed to comply  

with a specific condition incorporated in the policy, the appellant was  

within its rights to reject his claim and therefore the question of any  

deficiency in service by the appellant did not arise.  

8. Learned counsel appearing on behalf of the respondent, on the other  

hand, supporting the impugned order, submitted that in view of the  

2 JT 2001 (Suppl.2) SC 218 3 (2008) 1 SCC 696

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fact that the complainant “had held” and “had not been disqualified  

from holding a licence” by the licensing authority under Section 19 of  

the Act, there was no breach of special condition No. 5 in the cover  

note  as  alleged  by  the  appellant.  Learned  counsel  pleaded  for  

dismissal of the appeal.

9. Before we deal with the rival contentions, it would be appropriate to  

briefly refer to the relevant provisions of the Motor Vehicles Act, 1988  

(for short “the Act”).

10.Section 3(1) of the Act inter alia stipulates that no person shall drive a  

motor vehicle in any public place unless he holds an effective driving  

licence issued to him authorizing him to drive the vehicle.

11.Section  5  declares  that  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 of the Act, to drive the vehicle.

12.Section 15 which provides for renewal of driving licence, insofar as it  

is relevant for our purpose, reads as follows:

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  

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renewed with effect from the date of its renewal:

The Section empowers a licensing authority to renew a driving licence  

issued under the provisions of the Act with effect from the date of its  

expiry.  However,  proviso  to  the  said  provision  clearly  provides  that  

where an application for renewal of a licence is made more than 30 days  

after  the date of  its  expiry,  the driving licence shall  be renewed  with  

effect from the date of its renewal.  

13.Section  19,  relied  upon  by  learned  counsel  for  the  claimant,  

authorizes the licensing authority to disqualify any person from holding  

a driving licence or revoke such a licence if the licensing authority is  

satisfied that the holder of the driving licence is indulging in any of the  

acts, detailed in sub-section (1) of Section 19 of the Act.  Indubitably,  

no  such  order  had  been  passed  against  the  driver  of  the  vehicle  

involved in the accident.

14.Having noted the relevant Statutory provisions, we may now advert to  

the facts at hand. As noticed above, the stand of the appellant is that  

the claim preferred by the claimant could not be processed and had to  

be repudiated because special condition No. 5 of the insurance policy  

had been violated inasmuch as the driver of the insured vehicle did  

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not  have  an  effective  driving  licence  at  the  time  of  the  accident.  

Special condition No. 5 reads as follows:

“5. Persons or classes of persons entitled to drive

(a) The insured (b) Any other person who is driving on the insured’s order or  

with his permission.

Provided that the person driving holds or had held and has  not  been  disqualified  from  holding an  effective  driving  licence with all the required endorsements thereon as per the  Motor Vehicles Act and the Rules made thereunder for the  time being in force to drive the category of  Motor  Vehicle  insured hereunder.”

15.It is manifest that the said condition contemplates that apart from the  

insured, any other person, authorised by the insured, could also drive  

the vehicle provided the person driving the vehicle “holds or had held  

and  has  not  been  disqualified”  from  holding  an  effective  driving  

licence.

16.In the instant case, as noted above, as per the certificate issued by  

the licensing authority, the driving licence of the deceased driver had  

expired on 25th October,  1991  i.e. four  months prior  to the date of  

accident on 29th February, 1992 and it was renewed with effect from  

23rd March, 1992. It is not the case of the claimant that the driver had  

applied for renewal of the licence within 30 days of  the date of its  

expiry. On the contrary, it is the specific case of the appellant that the  

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driving licence was renewed only with effect from 23rd March, 1992.  

From a plain reading of Section 15 of the Act, it  is clear that if  an  

application for renewal of licence is made within 30 days of the date of  

its  expiry,  the licence continues to be effective and valid without  a  

break as the renewal dates back to the date of its expiry. Whereas,  

when an application for renewal is filed after more than 30 days after  

the date of its expiry, proviso to sub-section (1) of Section 15 of the  

Act, gets attracted and the licence is renewed only with effect from the  

date of its renewal, meaning thereby that in the interregnum between  

the date of expiry of the licence and the date of its renewal, there is no  

effective licence in existence. The provision is clear and admits of no  

ambiguity. However, the stand of the claimant before the District and  

State Fora as also before us was that since the deceased driver was  

holding a valid licence and had not been disqualified from holding an  

effective licence, the stipulation in the afore-extracted condition was  

not  infringed.  In  our  view,  the  argument  is  stated  to  be  rejected.  

Admittedly,  having failed to apply for renewal of the driving licence  

within 30 days from the date of its expiry in terms of Section 15 of the  

Act, the licence could not be renewed with effect from the date of its  

expiry and therefore, between the period from 26th October, 1991 to  

22nd March,  1992,  the  deceased  driver  had  no  valid  and  effective  

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driving licence as contemplated under Section 3 of the Act.  We are  

convinced that during this period, he did not hold at all an effective  

driving licence, as required in the terms and conditions governing the  

policy on the date of accident i.e. 29th February, 1992.   

17.As a matter of fact, in view of the clear mandate of Section 3 of the  

Act, the deceased driver was not even permitted to drive the insured  

vehicle  in  a  public  place.  Furthermore,  the  claimant  not  only  

committed  breach  of  the  terms  of  the  policy,  he  also  violated  the  

provisions of Section 5 of the Act by entrusting the vehicle to a person  

who did not hold a valid licence on the date of the accident.  Although  

it was not pleaded by learned counsel for the appellant, but we fail to  

understand as to how the licence was and could be renewed w.e.f.  

23rd March,  1992  after  the  death  of  the  licence-holder  on  29th  

February, 1992.  In our opinion, therefore, the appellant was not liable  

to indemnify the claimant for the loss suffered by him in the accident  

of the insured vehicle.  

18.We are fortified in our view by the decision of this Court in the case of  

Jarnail  Singh (supra).  In that  case also,  the driving licence of  the  

driver, who drove the vehicle which got involved in the accident, had  

expired on 16th May, 1994. The accident took place more than five  

months thereafter  i.e. on 20th October, 1994 and the driving licence  

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was renewed only with effect from 28th October, 1996. On these facts,  

it was held that proviso to sub-section (1) of Section 15 applied; the  

driver had no licence to drive the vehicle on the date of accident; the  

condition in the policy identical  to the one in the present case was  

violated and therefore, the Insurance Company was not liable to pay  

any amount to the insured.

19.We are also of the opinion that Section 19 of the Act does not come to  

the aid of  the claimant.  Having found that  between the period 26th  

October, 1991 and 22nd March, 1992, the driver of the insured vehicle  

had  no  valid  licence,  the  latter  part  of  the  afore-extracted  special  

condition did not come into play.

20.We  also  find  force  in  the  contention  of  learned  counsel  for  the  

appellant  that  the  ratio  of  the  decision  of  this  Court  in  Ashok  

Gangadhar’s case (supra), relied upon by the National Commission,  

does not apply to the case at hand. In that case, the appellant was the  

owner of a Light Motor Vehicle, which was insured with the Insurance  

Company. The vehicle met with an accident and a claim was lodged  

by  the  complainant  before  the  Consumer  Commission.  It  was  

contended by the Insurance Company that the truck was a “goods  

carriage” or a “transport vehicle” and since the driver of the truck was  

holding a driving licence to drive only “Light Motor Vehicle”, he was  

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not authorized to drive transport vehicle without an endorsement on  

his driving licence authorizing him to drive such transport vehicle. The  

claim of the insured having been rejected by the Insurance Company  

which  was  upheld  by  the  National  Commission,  the  complainant  

approached this Court. Allowing the appeal, it was held that the driver  

of the vehicle was holding a valid driving licence for driving a Light  

Motor Vehicle and there was no material on record to show that he  

was disqualified from holding an effective and valid driving licence at  

the time of accident. On those facts, the Court held that the policy,  

which was not even placed on record, did not insist on the driver to  

have  a  licence  to  drive  a  transport  vehicle  by  obtaining  a  specific  

endorsement and therefore, the Insurance Company was not justified  

in  rejecting  the  claim  by  the  insured.  It  was  observed  that  the  

Insurance Company had neither pleaded nor proved that the vehicle  

was a transport vehicle.  The permit issued by the transport authority  

had not been placed on record.  In the present case, it stands proved  

that the driver did not have an effective and valid driving licence on  

the date of accident.

21.For the aforesaid reasons, in our opinion, the decision of the National  

Commission cannot be sustained. Accordingly, the appeal is allowed  

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and the impugned order is set aside. There will, however, be no order  

as to costs.

……………………………………J. (D.K. JAIN)

…………………………………….J.                    (B. SUDERSHAN REDDY)

NEW DELHI; JULY 10, 2009.

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