Holding

A light motor vehicle is not necessarily a transport vehicle; the driver held an effective licence to drive a light motor vehicle, so the insurer is liable to honour the claim.

Summary

Ashok Gangadhar Mara Tha owned a Swaraj Mazda truck classified as a light motor vehicle and insured it with Oriental Insurance. The vehicle was totally damaged in an accident, but the insurer denied the claim, alleging that the driver held only a licence for a light motor vehicle and not for a transport (goods carriage) vehicle, which the insurer claimed the truck to be. The State Consumer Disputes Redressal Commission allowed the claim, but the National Consumer Disputes Redressal Commission reversed, holding a breach of policy. The Supreme Court examined the definitions of "light motor vehicle", "transport vehicle" and "goods carriage" under the Motor Vehicles Act, 1988 and the Central Motor Vehicle Rules, 1989, and found no evidence that the vehicle required a goods‑carriage permit or that the driver lacked an effective licence. Consequently, the Court held the insurer liable and set aside the National Commission’s order, restoring the State Commission’s decision.

Issues considered

Whether a light motor vehicle is automatically a transport vehicle (goods carriage) under the Motor Vehicles Act, 1988.
Whether the driver possessed an effective driving licence to operate the insured vehicle at the time of the accident.
Whether the insurer can deny liability on the ground of alleged breach of policy requiring a licence for a transport vehicle.

Legislation cited

Central Motor Vehicle Rules, 1989s. Rule 16, s. Rule 2(e)
Consumer Protection Act, 1986
Motor Vehicles Act, 1988s. 2(21), s. 3, s. 66, s. 77, s. 78, s. 79

Subjects

Motor Vehicles Acteffective driving licencelight motor vehicletransport vehiclegoods carriageinsurance liabilityconsumer protectionpolicy breach

Judgment

A ASHOK GANGADHAR MARA THA
v.
ORIENTAL INSURANCE CO. LTD.

SEPTEMBER 2, 1999

B [S. 'S-AGHIR AHMAD AND D.P. WADHWA JJ.]
•
'
Motor Vehicle Act, 1988-Sections
., 2, 3, 66, 77, 78 and 79-Liability
of insurer-Effective licence-ukfK.~t Motor Vehicle-Such a vehicle, even
though designed to be used as a goofis carrier or transport vehicle, remained
C a light motor vehicle and not a light goods vehicle or a transport vehicle
in view of Section 66-Driver of the Light Motor Vehicle neither having a
permit for a goods ca"iage nor carrying any goods on the date ofacddent-
Insurer neither pleaded nor produced ihat the vehicle in question was having
a permit for goods carriage-Held, licence to drive light Motor Vehicle
D issued in Form 6 was an effective and valid licence to drive such a vehicle--
Insurer cannot escape liability alleging breach ofpolicy by insured-Central
Motor Vehicle Rules, 1989-Rule 16 Form 6.

Words and Phrases-"Effective driving licence"~Meaning of in the
context of Section 3 of Motor Vehicle Act, 1988.
E
"Light Motor Vehicle"-Meaning of in the context of Central Motor
Vehicle Rules, 1989, Rule 2(h) and Motor Vehicles Act, 1988, Section 2 (21).

Appellant was owner of a registered truck, a light Motor vehicle. The
vehicle was insured with the respondent for a certain amount and for a
F certain period. The said vehicle was weighing less than the maximuni limit .
prescribed in Section 2(21) of Motor Vehicles Act 1988. Within the period
of insurance, the vehicle met with an accident and got completely datnaged.
The respondent refused to honour the claim of the appellant under the
insurance policy. Appellant approached the consumer redressal forum. The
G State Commission allowed the claim of the appellant Aggrieved by the order
respondent filed an appeal before the National Commission. The National
Commission accepted the contentions of the respondent that the vehicle in
question was a goods carriage and thus a transport vehicle and driver of such
vehi~le was not authorised to drive a transport vehicle. It, therefore, held that
the appellant having committed breach of the terms of insurance policy and
H 202
A.G. MARA THA v. ORIENTAL INSURANCE CO. LTD. 203
the provisions of the Act, the respondent was not liable to indemnify the A
appellant. Hence this appeal.

Allowing the appeal, the Court

HELD : 1. For a vehicle to be a transport vehicle, it must be a goods
carriage which in turn means any motor vehicle constructed or adapted for B
use solely for the carriage of goods or when not so constructed or adapted
used for the carriage of goods. The Motor Vehicle Act contains definition
of"heavy goods vehicle" and "medium goods vehicle" but there is no definition
of "light goods vehicle". Instead the definition is of "light motor vehicle".
If the definition of a "light motor vehicle" as given in Section 2 (21) of the C
Act is applied to mean a "transport vehicle" which in turn means a "goods
carriage" then one would find nowhere the definition of a "light motor
vehicle" without it being a "goods carriage". Section 2 of the Act begins
with the words "unless in this Act the context otherwise requires". Therefore,
one has to give a meaningful interpretation to "light motor vehicle" as given
in clause (21). Rule 2(e) of the Central Motor Vehicle Rules, 1989 defines D
"non-transport vehicle" to mean a motor vehicle which is not a transport
vehicle (clause (e) renumbered as clause (h) by 1993 Amendment to Rules).
This definition would, therefore, take out of the definition of "transport
vehicle" as given in clause (21) light motor vehicles which are not goods
carriage. (207-D-E]
E
2. There is no evidence on record and no claim has either been made
by the respondent that the vehicle in question was having a permit for goods
carriage. If the contention of the respondent is accepted, there can never be
any light motor vehicle and there can never be any driving licence for driving
a light motor vehicle. Such a construction on Section 2 (21) of the Actso F
as to exclude a light motor vehicle from the Act altogether cannot be put
forth. Light motor vehicle is a motor vehicle to drive for which driver
possessed effective driving licence. His driving licence was valid on the date
of accident. [208-D-E]

Moreover, on the date of accident, the vehicle was not carrying any G
goods, and though it could be said to have been designed to be used as a
transport vehicle or goods carrier, it cannot be so held on account of the
statutory prohibition contained in Section 66 of the Act. (209-B]

3. In the instant case the driver had the driving licence to drive a light
motor vehicle. It is not that the insurance policy covered a transport vehicle H
204 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A which meant a goods carriage. The whole case of the respondent has been
built on a wrong premise. Even according to the respondent, for a light motor
vehicle which is a non-transport vehicle, there was no statutory requirement
to have specific authorisation on the licence of the driver under Form 6
·under the Rules. The driver was holding effective valid licence on the date
B of accident to drive light motor vehicle. [210-A-B]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4490 of
1996.

From the Judgment and Order dated 4.5.95 of the National Consumer
C Disputes Redressal Commission, New Delhi in F.A. No. 65of1994.

Mrs. Rajni K. Prasad for T.C. Sharma for the Appellant.

Vishnu Mehra, Manish Sharma and K.M.K. Nair for the Respondent.

The Judgment of the Court was delivered by
D
D.P. WADHWA, J. Appellant has been non-suited by the National
Consumer Disputes Redressal Commission (for short, the 'National
Commission') on appeal by the insurer against the order of the State Consumer
Disputes Redressal Commission (for short, the 'State Commission'). Both the
E National Commission and the State Commission have been constitute4 under
the Consumer Protection Act, 1986. By judgment dated December 30; 1993 the
State Commission had allowed the complaint ofthe appellant and had directed
·-
the respondent-insurer to pay to the complainant-appellant a sum of Rs.
2,70,000 with interest@ 18 per cent per annum from the date of the accident
till payment for satisfying his claim under the policy issued by the respondent.
F The claim was made on account of damage caused to the motor vehicle
belonging to the appellant and insured with the respondent.

Appellant was the owner of a Swaraj Mazda truck, a light motor vehicle
bearing registration No.KA 28 567. The vehicle was insured with the respondent
G insurance company in the sum of Rs. 2,82,000 as per policy bearing No . .MV/
3440/91
I
for a period
/'
from February 17, 1991 to February
.
16, 1992. There
•
is no
dispute that the vehicle in question is a light motor vehide weighing less than
6,000 kg. The vehicle met with.an accident on·November 26, 1991 and was.
completely damaged. Appellant lodged his claim with the insurer under the
insurance policy covering the vehicle. Since the insurer refused to honotir its
H commitment under the insurance policy, the appellantfiled complaint with the
A.G. MARATHA v. ORIENTAL INSURANCE CO. LTD. [D.P. WADHWA,J.] 205
State Commission claiming Rs. 5,61,000. State Commission allowed the claim A
of the appellant to the extent of Rs. 2, 70,000 and granted him interest @ 18
per cent per annum with effect from the date of accident, i.e., November 26,
1991. The appellant also awarded cost amounting to Rs. 2,500. State Commission
negatived the plea of the insurer that the vehicle was not being driven by
person having an effective driving licence.
B
Against the judgment of the State Commission, insurer filed appeal
before the National Commission which was allowed by the impugned judgment·
dated May 4, 1995. National Commission accepted the stand of the insurer
as spelled out in para 14 of the counter affidavit filed by the insurer before
the State Commission. This para 14 we reproduce as under : C
"This respondent states that the said assessment of the surveyor was
subject to the condition that the Insured had not violated the terms
and conditions of the policy. This respondent states that on verification
of the documents produced by the insured revealed that the vehicle
in question was a light goods vehicle and hence a transport vehicle. D
The driving particulars of the driver, Naga Saheb Jadhav which were
produced by the insured disclosed that he had held a driving licence
to drive light motor vehicle only which was valid for the period 27.2.90
to 26.2.99. This driving licence, thus revealed that Naga Saheb Jadhav
was not authorised to drive a transport vehicle. This respondent E
states that the insured had committed breach of the terms of the
policy and violated the provisions of M. V. Act, 1988 in entrusting a
transport vehicle to a person who had not held a valid driving licence
to drive a transport vehicle and as a consequence thereof, this
respondent was not liable to indemnify their insured in respect of the
own damage claim lodged vide his claim form dated 10.12.1991." F
Under Section 3 of the Motor Vehicles Act, 1988 (for short, the 'Act'),
no person shall drive a Motor Vehicle in any public place unless he holds an
effective driving liceµ.ce issued to him authorising him to drive the vehicle.
Section 3 is as under:
G
"3. Necessity for driving licence.-(1) N.-> person shall drive a motor
vehicle in any public place unless he holds an effective driving
licence issued to him authorising him to drive the vehicle; and no
person shall so drive a transport vehicle other thay. a motor cab or
motor cycle hired for his own use or rented under any scheme made
under sub-section (2) of Section 75 unless his driving licence H
206 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R..

A specifically entitles him so to do.

(2) The conditions subject to which sub-section (1) shall not apply to
a person receiving instructions in driving a motor vehicle shall be
such as may be prescribed by the Central Government."

B This Section uses two expressions, namely, "motor vehicle" and "effective
driving licence". "Effective" would mean a valid licence both as regards the
period and type of vehicle. We are not considering here otherwise any
incapacity of the person holding a driving licence. "Driving licence", "Motor
vehicle" or "vehicle", "transport vehicle'\ "light motor vehicle", "goods
carriage", "heavy goods vehicle" and "medium goods vehicle" have been
C defined in Section 2 of the Act as under:

"driving licence" (clause 10) means the licence issued by a competent
authority under Chapter II authorising the person specified therein to drive,
otherwise th~ as a learner, a motor vehicle or a motor vehicle of any specified
D class or description; "motor vehicle" or "vehicle" [clause (28)] means any
mechanically propelled vehicle adapted for use upon roads whether the power
of propulsion is transmitted thereto from an external or internal source and
includes a chassis to which a body has not been attached and a trailer; but
does not include a vehicle running upon fixed rails or a vehicle of a special
type adapted for use only in a factory or in any other enclosed premises or
E a vehicle having less than four wheels fitted with engine capacity of not
exceeding twenty-five cubic centimetres; "transport vehicle" [clause (47)]
means a public service vehiCle, a goods carriage, an educational institution
bus or a private service vehicle; "light motor vehicle" [clause (21)] means a
transport vehicle or omnibus the gross vehicle weight of either of which or
a motor car or tractor or road-roller the unladen weight of any of which, does
F not exceed 7500 kilograms; "goods carriage" [clause (14)] means any motor
vehicle constructed or adapted for use solely for the carriage of goods, or any
motor vehicle not so constructed or adapted when used for the carriage of
g()ods; "heavy goods vehicle" [clause (16)] means any goods carriage the
gross vehicle weight of which, or a tractor or a road-rolier the unladeR weight
G of either of which, exceeds 12,000 kilograms; and "medium goodS vehicle"
[clause (23)] means·any goods carriage other than a light motor vehicle or a
heavy goods vehicle.

Naga Saheb Jadhav, the driver was having the driving licence to drive
a light motor vehicle. On the day of the accident, vehicle was not carrying
H any goods. Contention of the insurer has been that the vehicle was a goods
A.G. MARATHA v. ORIENTAL INSURANCE CO. LTD. [D.P. WADHWA, J.] 207
carriage and thus a transport vehicle. Rule 16 of the Central Motor Vehicle A·
Rules, 1989 prescribes the form under which a driving licence is to be issued.
It is form No.6. Jadhav was having a driving licence in form 6 which was for
driving a light motor vehicle. There was no endorsement on his driving
licence authorising him to drive a transport vehicle. For a vehicle to be a
transport vehicle, it must bi~ goods carriage which in tum means any motor
vehicle constructed or adapted for use solely for the carriage of goods or B
when not so constructed or adapted used for the carriage of goods. We have
the definitions of "heavy goods vehicle" and "medium goods vehicle". There
is no defmition of "light goods vehicle". Instead the definition is of "light
_motor vehicle". Ifwe apply the definition of a "light motor vehicle" as given
in clause (21) of Section 2 of the Act to mean a "transport vehicle" which in C
tum means a "goods carriage" then we ha.ve nowhere the definition of a "light
motor vehicle" without it being a "goods carriage". Section 2 of the Act
begins with the words "unless in this Act the context otherwise requires". We
have therefore, to give a meaningful interpretation to "light motor vehicle" as
given in clause (21 ). Clause ( e) of Rule 2 of the Central Motor Vehicle Rules,
1989 defines "non-transport vehicle" to mean a motor vehicle which is not a D
transport vehicle (clause (e) renumbered as clause (h) by 1993 Amendment
to Rules). This definition would, therefore, take out of the definition of
'transport vehicle" as given in clause (21) light motor vehicles which are not
goods carriage.

. Chapter V of the Act contains provisions for Control of Transport
Vehicles. Under Section 66 of the Act falling under this chapter no owner of
E

a motor vehicle shall use or permit the use of the vehicle as a transport vehicle
in any public place whether or not such vehicle is actually carrying any
passenger or goods except in accordance with the conditions of permit
granted by the prescribed authority authorising the use of the vehicle in that F
place in the manner in which the vehicle is being used. Sub-section (1) of
Section 66 we quote:

"66. Necessity for permits.-(1) No owner of a motor vehicle shall use
or permit the use of the vehicle as a transport vehicle in any public
place whether or not such vehicle is actually ~arrying any passengers G
or goods save in accordance with the conditions of a permit granted
or countersigned by a Regional or State Transport Authority or any
prescribed authority authorising h.im the use of the vehicle in that
• place in the manner in which the vehicle is being used:

Provided that a stage carriage perm.it shall, subject to any conditions H
208 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A that may be specified in the pennit, authorise the use of the vehicle
as a contract carriage;

Provided further that a stage carriage pennit may, subject to any
conditions that may be specified in the pennit, authorise the use of
the vehicle as a goods carriage either when carrying passengers or
B not;

Provided also that a goods carriage pennit shall, subject to any
conditions that may be specified in the pennit, authorise the holder
to use the vehicle for the carriage of goods for or in connection with
a trade or business carried on by him."
c
Section 77 deals with an application for pennit to use a motor vehicle
for the carriage of goods. Section 78 prescribes relevant considerations for
processing such an application. Section 79 provides for grant of goods
carriage pennit.

D There is no evidence on record and no claim has either been made by
the insurer that the vehicle in question was having a permit for goods
carriage. If we accept the contention of the insurer, there can never be any
light motor vehicle and there can never be any driving licence for driving a
light motor vehicle. We can not put such a construction on clause (21) of
E Section 2 of the Act so as to exclude a light motor vehicle from the Act
altogether. Light motor vehicle is a motor vehicle to drive for which Jadhav
possessed effective driving licence. His driving licence was valid on the date
of accident. In allowing the claim of the appellant the State Commission held
that "the driver who drove the -vehicle at the time of accident, had as a matter
of fact, a valid driving ~~t:n~e for driving a light motor vehicle and there is
F no material on record to show that he was disqualified from holding or
obtaining such a licence at the time of accident. In view of these facts and
in the circumstances of the case, we are satisfied that !he policy does not
insist on the driver having a licence to drive, to obtain a specific endorsement
to drive a transport vehicle." We, however, do not subscribe to such a view.
G
Definition of "light motor vehicle" as given iii clause (21) of Section 2
of the Act can apply only to a "light goods vehicle" or a "light transport
vehicle". A "light motor vehicle" otherwise has to be covered by the definition
of"motor vehicle" or "vehicle" as given in clause (28) of Section 2 of the Act.
A light motor vehicle cannot always mean a light goods carriage. Light motor
H vehicle can be non-transport vehicle as well.
-- A.G. MARATHAv. ORIENTAL INSURANCE CO. LTD. [D.P. WADHWA,J.] 209
To reiterate, since a vehicle cannot be used as transport vehicle on a A
public road unless there is a pennit issued by the Regional Transport Authority
for that purpose, and since in the instant case there is neither a pleading to
that effect by any party nor is there any pennit on record, the vehicle in
question would remain a light motor vehicle. The respondent also does not
say that any permit was granted to the appellant for plying the vehicle as a
transport vehicle under Section 66 of the Act. Moreover, on the date of B
accident, the vehicle was not carrying any goods, and though it could be said
to have been designed to be used as a transport vehicle or goods-carrier, it
cannot be so held on account of the statutory prohibition contained in
Section 66 of the Act.
.- c
It was pointed out by the appellant that the legal representative of
Jadhav, the driver, had filed a petition for compensation under the Act. Insurer
had resisted the claim taking the stand that the driver of the vehicle did not
possess a valid driving licence to drive the vehicle. The plea of the insuri;r
was rejected by the Claims Tribunal and petition for compensation was allowed
and compensation paid to the legal representative of the driver. No appeal D
was preferred by the insurer in that case.

In the present case, the insurer alleged that the appellant had committed
breach of the terms of the insurance policy and had violated the provisions
of the Act by entrusting a "transport vehicle" to a person who did not hold
E
a valid licence and the insurer was, thus, not liable to indemnify appellant.
Under the policy firstly light motor vehicle meant the gross weight of which
did not exceed 6,000 kilograms and secondly against the column "driver" the
policy stated:

"Drivers clause:- Persons or classes of persons entitled to drive: any F
person including the insured.

Provided that a person driving holding an effective driving licence
at the time of the accident and is not disqualified from holding or
___.,,.... obtaining such a licence.
G
Provided also that ifa person holding an effective learner's licence
may also drive the vehicle when not used for the transport of goods
..... at the time of the accident and that such a person satisfies the
requirements of Rule 3 of the Central Motor Vehicles Rules, 1989."

Now the vehicle in the present case weighed 5,920 kilograms and the H
210 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A driver had the driving licence to drive a light motor vehicle. It is not that, the
insurance policy covered a transport vehicle which meant a goods carriage.
The whole case of the insurer has been built on a wrong premise. It is itself
the case of the msurer that in the case of a light motor vehicle which is a non-
transport vehicle, there was no statutory requirement to have specific
B authorisation on the licence of the driver under Form 6 under the Rules. It
has, therefore, to be held that Jadhav was holding effective valid licence on
the date of accident to drive light motor vehicle bearing Registration No. KA-
28-567.

Accordingly, the appeal is allowed. Order of the National Consumer
C Disputes Redressal Commission is set aside and that of the State Consumer ·
Disputes Redressal Commission restored though on different grounds.
Appellant would be entitled to costs.
-
NJ. Appeal allowed.