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CASE NO.: Appeal (civil)  1733 of 2008

PETITIONER: Sardari & Ors

RESPONDENT: Sushil Kumar & Ors

DATE OF JUDGMENT: 04/03/2008

BENCH: S.B. Sinha & V.S. Sirpurkar

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO.     1733            OF 2008 [Arising out of SLP (C) No. 19965 of 2004]

S.B. Sinha, J.

       Leave granted.   

1.      Jagiru was a tonga driver.  While, he was driving his tonga on  10.2.1985, he met with an accident, as it collided with a tractor bearing  Registration No. HYC 173.   In the said accident, he received injuries and  ultimately expired on 15.2.1985.  At the time of his death, he was aged 40  years.

An application for payment of compensation by the appellants was  filed in terms of Section 110-A of Motor Vehicles Act, 1939 (for short "the  Act").   Respondent Insurance Company inter alia raised a contention therein  that the driver of the said tractor did not hold a valid and effective license.   

2.      Before the Motor Vehicle Accident Claims Tribunal (The Tribunal),  the driver of the said Tractor, Sushil Kumar was examined.  He categorically  stated that he did not know how to drive a tractor and he never even tried to  learn driving of the tractor.  He admitted that he had not been possessing any  valid driving license to drive a tractor.   It was accepted by him that he had  even never applied therefor. He also, in answer to a question put to him in  cross-examination, admitted that he did not hold a driving license.  

The learned Tribunal answered the relevant issue in the following  terms;

"15.   It is admitted by respondent No. 1 that he was  not holding any driving licence to drive the tractor at  the time of alleged accident and in fact he never  possessed any driving licence.   Since the respondent  No. 1 was not holding any driving licence to drive the  tractor, so, in view of the conditions contained in the  copy of policy Ex. R1, the respondent No. 3 is not  liable to pay any compensation.   Accordingly, this  issue is decided in favour of the respondent No. 3  against the petitioners."  

3.      In that view of the matter, the application for grant of compensation  was dismissed. An appeal preferred thereagainst by the appellants has also  been dismissed by the High Court.  The High Court, however, was of the

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opinion that the finding of the Tribunal that no accident took place due to  rash and negligent driving of Sushil Kumar, was not correct holding that the  appellants were entitled to compensation of Rs. 63,000/- from the  respondent Nos. 1 and 2.    

4.      Appellants are, thus, before us.

       Nobody has appeared on behalf of the appellants.  

5.      The question, as regards the purport and object for which  the Act had  been enacted and as also the statutory obligations on the part of the owner of  the vehicle to get the same compulsorily insured came up for consideration  in a large number of cases.   

This Court, time and again made a distinction between a case where  third party is involved vis-‘-vis where the owner of the vehicle was involved  in the accident.  The matter relating to grant of license is dealt with in the  Act. There are provisions in terms whereof despite expiry of the period of  license, the same can be renewed.   There are also provisions providing for  grant of a fresh license.    In certain situation, the authorities are also entitled  to refuse to renew the license. 6.      Although, in terms of a contract of insurance, which is in the realm of  private law domain having regard to the object for which Section 147 and  149 of the Act had been enacted, the social justice doctrine as envisaged in  the preamble of the Constitution of India has been given due importance.    The Act, however, itself provides for the cases where the insurance  Company can avoid its liability. Avoidance of such liability would largely  depend upon violation of the conditions of contract of insurance. Where the  breach of conditions of contract is ex-facie apparent from the records, the  Court will not fasten the liability on the Insurance Company.  In certain  situations, however, the Court while fastening the liability on the owner of  the vehicle may direct the Insurance Company to pay to the claimants the  awarded amount with liberty to it to recover the same from the owner.  7.      The concurrent finding of fact herein is that Sushil Kumar never held  a license.  The owner of the vehicle has a statutory obligation to see that the  driver of the vehicle whom he authorized to drive the same holds a valid  license.   Here again, a visible distinction may be noticed, viz. where the  license is fake and a case where the license has expired, although initially  when the driver was appointed, he had a valid license.           The question came up for consideration before this Court in  United  India Insurance Co. Ltd. Vs. Gian Chand and Others  [(1997) 7 SCC 558],  wherein it was held; "12. Under the circumstances, when the insured had  handed over the vehicle for being driven by an  unlicensed driver, the Insurance Company would get  exonerated from its liability to meet the claims of the  third party who might have suffered on account of  vehicular accident caused by such unlicensed  driver...."  

       A three Judges’ Bench of this Court in National Insurance Co. Ltd.  Vs. Swaran Singh and Others  [(2004) 3 SCC 297], upon going through the  provisions of the Act as also the precedents operating in the field, laid down  the following dicta; "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

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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 22 .)"  

                        In National Insurance Co. Ltd. Vs. Kusum Rai and Others [(2006) 4  SCC 250], a Bench of this Court (wherein one of us was a member) held; 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, therefore, there was  a breach of condition of the contract of insurance. The  appellant, therefore, could raise the said defence.    14. This Court in Swaran Singh  clearly laid  down that the liability of the Insurance Company  vis-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-‘-vis the driver  being not in possession of valid license has also been considered in para 89  in Swaran Singh (supra).

8.      Yet again in New India Assurance Co. Ltd. Vs. Prabhu Lal [JT 2007  (13) SC 246], the Court stated the law in the following terms:- "33.  In the present case, all the facts were before the  District Forum.   It considered the assertion of the  complainant and defence of the Insurance Company  in the light of the relevant documentary evidence  and held that it was established that the vehicle  which met with an accident was a ’transport  vehicle’.   Ram Narain was having a licence to drive  Light Motor Vehicle only and there was no  endorsement as required by Section 3 of the Act  read with Rule 16 of the Rules and Form No. 6.   In  view of necessary documents on record, the  Insurance Company was right in submitting that  Ashok Gangadhar does not apply to the case on  hand and the Insurance Company was not liable."

       However, Swaran Singh (supra) has been distinguished by this Court  in some cases holding that where the owner of the vehicle himself is  involved, insurance company will not be liable.   

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In Premkumari & Ors. Vs. Prahlad Dev & Ors. [(2008) 1 SCALE  531], a Bench of this Court following Kusum Rai (supra), opined; "10. In the case of  National Insurance Co. Ltd. v.  Kusum Rai and Ors.  (2006) 4 SCC 250, the vehicle  was being used as a taxi. It was, therefore, a  commercial vehicle. The driver of the said vehicle  was required to hold an appropriate licence therefor.  Ram Lal, who allegedly was driving the said vehicle  at the relevant time, was holder of a licence to drive  light motor vehicle only. He did not possess any  licence to drive a commercial vehicle. Therefore,  there was a breach of condition of the contract of  insurance. In such circumstances, the Court observed  that the appellant-National Insurance Co. Ltd.,  therefore, could raise the said defence while  considering the stand of the Insurance Company. This  Court, pointing out the law laid down in Swaran  Singh (supra) concluded that the owner of the 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. However, taking note of the fact  that the owner has not appeared, the victim was aged  only 12 years, the claimants are from a poor  background and to avoid another round of litigation  applying the decision in Oriental Insurance Co. Ltd.  v. Nanjappan (2004) 13 SCC 224 and finding that  though the appellant-Insurance Company was not  liable to pay the claimed amount as the driver was not  possessing a valid licence and the High Court  committed an error in holding otherwise, in the  peculiar facts and circumstances of the case and in  exercise of jurisdiction under Article 136 of the  Constitution declined to interfere with the impugned  judgment therein and permitted the appellant-  Insurance Company to recover the amount from the  owner of the vehicle."  

       In Oriental Insurance Co. Limited Vs. Prithvi Raj [2008 (1) SCALE  727], however, noticing Swaran Singh (supra), it was opined; "10.  In the instant case, the State Commission has  categorically found that the evidence on record clearly  established that the licensing authority had not issued  any license, as was claimed by the Driver and the  respondent. The evidence of Shri A.V.V. Rajan, Junior  Assistant of the Office of the Jt. Commissioner &  Secretary, RTA, Hyderabad who produced the official  records clearly established that no driving license was  issued to Shri Ravinder Kumar or Ravinder Singh in  order to enable and legally permit him to drive a motor  vehicle. There was no cross examination of the said  witness. The National Commission also found that there  was no defect in the finding recorded by the State  Commission in this regard."  

       In Ishwar Chandra & Ors. Vs. The Oriental Insurance Co. Ltd. & Ors.  [2007 (4) SCALE 292], this Court held; "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

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thereof is filed thereafter, the same would be renewed  from the date of its renewal. The accident took place  28.04.1995. 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."

9.      For the reasons aforementioned, there is no merit in this appeal which  is accordingly dismissed.  However, in the facts and circumstances of this  case, there shall be no order as to costs.