REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   4749           OF 2008 (Arising out of SLP (C) No.17920 of 2006)

Ram Babu Tiwari         … Appellant

Versus

United Indian Insurance Co. Ltd. & Ors.         … Respondents

With

CIVIL APPEAL NO.  4750            OF 2008 (Arising out of SLP (C) No.17921 of 2006)

J U D G M E N T

S.B. Sinha, J.

1. Leave granted.

2. Appellant is aggrieved by and dissatisfied with the judgment and

order dated 28.11.2005 passed by the High Court of Madhya Pradesh at

Gwalior  in  Misc.  Appeal  No.5/2000  whereby  and  whereunder  the

appeals  preferred  by  the  respondent  herein  against  an  award  dated

6.10.1999 passed  by the  Additional  Motor  Accident  Claims Tribunal,

Vidisha,  in Claim Case Nos.57 of 1998 and 52 of 1998 were allowed

opining  that  the  respondent-insurance  company  was  not  liable  to

indemnify the insured.

3. Bereft of all unnecessary details, the fact of the matter is that on

27.1.1996 the deceased Rajendra Singh and Balaram along with others

were  travelling by a truck bearing  registration  No.MP-06/E/0129 with

their  buffalos  on  27.1.1996  from  Agra  to  Vidisha.   It  met  with  an

accident having been hit by a tractor trolly bearing registration No.MP

-6/J/7506.   Rajendra  Singh  died  on  the  spot  whereas  Balaram  was

seriously injured in the said accident.  He was admitted in a hospital at

Gwalior where he succumbed to his injuries.   

4. A First Information Report was also lodged with regard to the said

incident.

5. Having  been  served  with  a  notice  in  the  proceedings  claiming

compensation by the dependents of the said deceased in terms of Section

166  of  the  Motor  Vehicles  Act,  1988,  the  respondent,  in  his  written

statement, inter alia, raised a contention that the driver of the tractor, the

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respondent No.6, did not have any valid and effective driving licence to

drive the said vehicle on the said date of accident.   

6. The learned Tribunal, having regard to the pleadings of the parties,

inter alia, framed the following issue :

Issues Findings 1 to 5  …. … 6. Whether  the  terms  of  the

insurance  policy  has  been violated in this case?

No

7. By reason of an award dated 6.10.1999, the learned Tribunal held

that the driver Ram Prakash was having valid licence only for the period

11.2.1990 and 10.2.1993 and again from 7.2.1996 to 7.2.1999.   

Indisputably, therefore, the driver Ram Prakash did not hold any

licence during the period 11.2.1993 to 6.2.1996.   

The learned Tribunal held :

“Therefore,  in  United  India  Insurance  Co.  v. Sherali  [1999  (1)  MPW  N.  90],  it  was  laid down  that  if  the  driver  was  having  driving license but the same was not got renewed at the time of  the  accident,  then  insurance  company can not be exonerated from its liability.  In this case  as  well,  non-applicant  No.1  was  having license and for this reason driving of the tractor in violation of the terms of the insurance policy is  not  proved  and  non-applicant  no.2  cannot

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escape from its liability.  Therefore, issue No.6 is being decided negatively.”

8. In  the  appeals  preferred  by  the  respondents  herein  in  terms  of

Section 173 of  the  Motor  Vehicles  Act,  the  High Court,  on the  other

hand, held :

“Learned  Counsel  for  the  appellant  drew  my attention to the decision of the Apex Court in the case of New India Assurance Co. Ltd. vs. Mandar Madhav Tambe and others reported in 1996 ACJ 253.  In which it has been held that the insurance company would be liable only if the  vehicle  was  being  driven  by  a  person holding a valid driving licence or a permanent driving licence other than learners licence and if the driver was holding no licence on the date of accident than the insurance company is not liable to indemnify the insured.  In the case of Manoj Vs. Samundar Singh and others reported in 2005 ACJ 520,  the  Division  Bench of  this Court  has  held  that  if  the  driver  of  the offending vehicle has no licence on the date of accident  then  the  insurance  company  is  not liable  to  indemnify the insured  as the  vehicle was being drivern in contravention of the terms and conditions of the insurance policy.  In the case of National Insurance Co. Ltd. Vs. Swaran Singh  and  others,  reported  in  AIR  2004  SC 1531, the Apex Court has held that the owner of the motor vehicle in terms of Section 5 of the Act has a responsibility to see that no vehicle is driven except by a person who does not satisfy the provisions of Section 3 or 4 of the Act.  In a case, therefore, where the driver of the vehicle admittedly  did  not  hold  any  licence  and  the same was allowed consciously to be driven by

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the  owner  of  the  vehicle  by such  person,  the insurer is entitled to succeed in its defence and avoid  liability.   The  Apex  Court  further  held that  the  breach  of  policy  condition  e.g. disqualification  of  driver  or  invalid  driving licence  of  the  driver,  as  contained  in  sub- section  2(a)(ii)  of  Section  149,  have  to  be proved to have been committed by the insured for avoiding  the liability  by the insurer.   The insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the  policy  regarding  use  of  vehicles  by  duly licensed driver or one who was disqualified to driver at relevant time.

9. In the present case it is duly proved that on the date of accident i.e. 27.1.1996 the driver was  not  having  valid  driving  licence  for  the period  from  11.2.1993  to  6.2.1996  and  his licence had expired and tractor driver was not having valid driving licence insurer cannot be absolved  of  its  liability  to  indemnify  the insured.   The  learned  Claims  Tribunal committed  an  error  in  holding  that  the insurance  company is  liable  to  indemnify  the insured.  In view of the law laid down by the Apex  Court  in  the  case  of  Swaran  Singh (supra), I hold that the amount of compensation shall  be  paid  by  the  appellant/insurance company and the same shall be recovered from the driver and the owner of the vehicle.   The Claims  Tribunal  has  erred  in  not  giving  the direction that insurer can recover the amount of compensation  paid  to  the  claimants  from the insured.”

8. Mr. Anish Kumar Gupta, learned counsel appearing on behalf of

the appellant, would submit that although the driver of the tractor did not

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hold any licence for the period 11.2.1993 to 6.2.1996, but having regard

to  the  provisions  contained  in  Section 15  of  the  Motor  Vehicles  Act,

1988 and in particular the second proviso appended to sub-section (4)

thereof, it must be held that the renewal of licence would take effect from

a retrospective date.  It was furthermore contended that in any view of

the matter in view of the decision of this Court in National Insurance Co.

Ltd. v. Swaran Singh & Ors. [(2004) 3 SCC 297], the respondent cannot

escape its liability so far as a third party is concerned in view of Sections

147 and 149 of the Act.

9. Mr.  Vishnu  Mehra,  learned  counsel  appearing  on  behalf  of  the

respondent, on the other hand, would support the impugned judgment.

10. Section  147  of  the  Act  mandates  obtaining  of  compulsory

insurance in relation to a third party by the owners of the motor vehicles.

Section 149 imposes a duty on the insurer to satisfy the judgments and

awards against the insured in respect of third party risks.  Sub-section (2)

of Section 149 however postulates that insurance company would have a

right to defend the action, inter alia, on a ground that there has been a

breech of specified condition of the policy as specified in various sub-

clauses; clause (ii) thereof being as under :

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“(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence   during  the  period  of  disqualification; or”

11. In view of the aforementioned provisions, in the event a defence

on the part  of the insurance company that  the vehicle involved in the

accident was not being driven by a driver having a valid driving licence

would be a valid one.  

The question as to what would constitute a breach of conditions of

the contract of insurance came up for consideration before this Court in

Swaran Singh (supra).  Our attention has been drawn to paragraph 39 to

44 of the said decision which read as under :

“39. The question as to whether an insurer can avoid its liability in the event it raises a defence as envisaged in sub-section (2) of Section 149 of the Act corresponding to sub-section (2) of Section 96 of the Motor Vehicles Act, 1939 had been the subject-matter of decisions in a large number of cases.

40. It is beyond any doubt or dispute that under Section 149(2) of the Act, an insurer, to whom notice  of  the  bringing  of  any  proceeding  for compensation  has  been  given,  can  defend  the action on any of the grounds mentioned therein.

41. However, clause (a) opens with the words “that  there  has  been  a  breach  of  a  specified

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condition  of  the  policy”,  implying  that  the insurer’s  defence  of  the  action  would  depend upon  the  terms  of  the  policy.  The  said  sub- clause contains three conditions of disjunctive character,  namely,  the  insurer  can  get  away from  the  liability  when  (a)  a  named  person drives the vehicle; (b) it was being driven by a person who did not have a duly granted licence; and  (c)  driver  is  a  person  disqualified  for holding or obtaining a driving licence.

42. We  may  also  take  note  of  the  fact  that whereas  in  Section  3  the  words  used  are “effective  licence”,  it  has  been  differently worded in Section 149(2) i.e. “duly licensed”. If a person does not hold an effective licence as on the date of the accident, he may be liable for prosecution in terms of Section 141 of the Act but Section 149 pertains to insurance as regards third-party risks.

43. A provision of a statute which is penal in nature vis-à-vis a provision which is beneficent to a third party must be interpreted differently. It  is  also  well  known  that  the  provisions contained in different expressions are ordinarily construed differently.

44. The  words  “effective  licence”  used  in Section 3, therefore, in our opinion, cannot be imported for sub-section (2) of Section 149 of the Motor Vehicles  Act.  We must also notice that  the  words  “duly  licensed”  used  in  sub- section (2) of Section 149 are used in the past tense.”

12. This  Court,  no  doubt,  laid  down  general  principles  in  the

aforementioned paragraphs but a bare perusal of the said judgment would

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clearly show that the court considered the effect of various fact situations

therein separately.  While considering the question as regards the liability

of the insurer when, admittedly, no licence was obtained by a driver, it

was held :

“84. We have analysed the relevant provisions of  the  said  Act  in  terms  whereof  a  motor vehicle  must  be  driven  by a  person  having  a driving licence. The owner of a motor vehicle in  terms  of  Section  5  of  the  Act  has  a responsibility  to  see  that  no  vehicle  is  driven except  by  a  person  who  does  not  satisfy  the provisions  of  Section  3 or  4  of  the Act.  In a case, therefore, where the driver of the vehicle, admittedly,  did  not  hold  any  licence  and  the same was allowed consciously to be driven by the  owner  of  the  vehicle  by such  person,  the insurer is entitled to succeed in its defence and avoid  liability.  The  matter,  however,  may  be different  where  a  disputed  question  of  fact arises  as  to  whether  the  driver  had  a  valid licence  or  where  the  owner  of  the  vehicle committed a breach of the terms of the contract of insurance as also the provisions of the Act by consciously allowing any person to drive a vehicle  who  did  not  have  a  valid  driving licence.  In  a  given  case,  the  driver  of  the vehicle may not have any hand in it at all e.g. a case where an accident takes place owing to a mechanical  fault  or  vis  major.  (See  Jitendra Kumar.)”

13. The question as to whether the owner of a vehicle had taken care

to inform himself as to whether the driver entrusted to drive the vehicle

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was having a licence or not is essentially a question fact.  However, in

this case, it stands admitted that as on the date of accident, namely, on

27.1.1996, the driver did not hold any licence.  Furthermore, it is beyond

dispute  that  he had a licence only for one year and for  about  3 years

thereafter, he failed and neglected to renew his licence.  His licence was

renewed only on and from 7.2.1996.   

14. What would be the effect of not having a licence for such a long

period is the question.

15. Section 15 of the Motor Vehicles Act provides for renewal of a

driving  licence.   Sub-section  (1)  of  Section  15  and  the  first  proviso

appended thereto read as under :

“Section 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  renewed  with  effect from the date of its renewal:

Provided further  that  where  the  application  is for the renewal of a licence to drive a transport vehicle or where in any other case the applicant has  attained  the  age  of  forty  years,  the  same shall be accompanied by a medical certificate in the  same form and in  the  same manner  as  is

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referred to in sub-section (3) of section 8, and the provisions  of  sub-section  (4)  of  section  8 shall,  so  far  as  may  be,  apply  in  relation  to every such case as they apply in relation to a learner's licence.”

16. Sub-section (4) of Section 15 of the Act provides that where an

application for the renewal of a driving licence is made more than 30

days after the date of its expiry, the fee payable for such renewal shall be

such  amount  as  may be  prescribed  by  the  Central  Government.   The

second  proviso  appended  thereto  whereupon  strong  reliance  has  been

placed by Mr. Gupta reads as under :

“Provided further that if the application is made more than  five  years  after  the driving  licence has  ceased  to  be  effective  the  licensing authority  may  refuse  to  renew  the  driving licence  unless  the  applicant,  undergoes  and passes to its satisfaction the test of competence to drive referred to in sub-section (3) of section 9.”

18. It  is  beyond  any  doubt  or  dispute  that  only  in  the  event  an

application for renewal of licence is filed within a period 30 days from

the  date  of  expiry  thereof,  the  same would  be  renewed  automatically

which  means  that  even  if  an  accident  had  taken  place  within  the

aforementioned period, the driver may be held to be possessing a valid

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licence.   The  proviso  appended  to  sub-section  (1)  of  Section  15,

however,  clearly states  that  the  driving  licence shall  be  renewed with

effect from the date of its renewal in the event the application for renewal

of a licence is made more than 30 days after the date of its expiry.  It is,

therefore, evident that as, on renewal of the licence on such terms, the

driver of the vehicle cannot be said  to be holding a valid licence,  the

insurer would not be liable to indemnify the insured.   

The second proviso appended to sub-section (4) of Section 15 is of

no assistance to the appellant.  It merely enables the licensing authority

to  take  a  further  test  of  competent  driving  and  passing  thereof  to  its

satisfaction within the meaning of Sub-section (3) of Section 9.  It does

not  say that  the  renewal  would  be  automatic.   It  is,  therefore,  a  case

where a breech of the contract of insurance is established.  This aspect of

the matter has been considered by this Court in  National Insurance Co.

Ltd. v. Kusum Rai & Ors. [(2006) 4 SCC 250] holding :

“11. It has not been disputed before us that the vehicle  was  being  used  as  a  taxi.  It  was, therefore, a commercial vehicle.  The driver of the said vehicle, thus, was required to hold an appropriate  licence  therefor.  Ram  Lal  who allegedly  was  driving  the  said  vehicle  at  the relevant  time,  as  noticed  hereinbefore,  was holder  of  a  licence  to  drive  a  light  motor vehicle only. He did not possess any licence to drive  a  commercial  vehicle.  Evidently,

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therefore, there was a breach of condition of the contract of insurance. The appellant, therefore, could raise the said defence.”

It was furthermore held :

“14. This Court in  Swaran Singh4 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.”

It was opined :

“16. In  a  case  of  this  nature,  therefore,  the owner of a vehicle cannot contend that he has no liability to verify the fact as to whether the driver of the vehicle possessed a valid licence or not.”

19. The principle laid down in Kusum Rai (supra) has been reiterated

in Ishwar Chandra & Ors. v. Oriental Insurance Co. Ltd. & Ors. [(2007)

10 SCC 650], referring to sub-section (1) of Section 15 of the Act, this

Court stated the law, thus :

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“9. From a bare perusal of the said provision, it would  appear  that  the  licence  is  renewed  in terms  of  the  said  Act  and  the  rules  framed thereunder. The proviso appended to Section 15 (1) of the Act in no uncertain terms states that whereas  the  original  licence  granted  despite expiry  remains  valid  for  a  period  of  30  days from the date of expiry, if any application for renewal  thereof  is  filed  thereafter,  the  same would be renewed from the date of its renewal. The accident took place 28-4-1995. As on the said date, the renewal application had not been filed, the driver did not have a valid licence on the  date  when  the  vehicle  met  with  the accident.”

20. For  the  reasons  aforementioned,  there  is  no  infirmity  in  the

impugned judgment.  The appeals are, therefore, dismissed.  However, in

the facts  and circumstances  of  the  case,  there  shall  be  no order  as  to

costs.

………………………….J.        [S.B. Sinha]

………………………….J.              [Cyriac Joseph]

New Delhi; August 1, 2008

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