Holding

The owner alone is liable to pay compensation, and the insurer must pay the awarded amount but may recover it from the owner, with the deposited sum to be refunded if not withdrawn by the claimant.

Summary

The case arose from a motor accident in which a goods vehicle, insured by National Insurance Co. Ltd., struck and killed Kishan Lal, a vegetable dealer who was travelling in the truck to collect empty boxes. The claimant, Kaushalya Devi, sought compensation under Section 166 of the Motor Vehicles Act, 1988. The Tribunal awarded Rs.1,18,000, but the High Court held the insurer not liable, directing the deposited amount to be released to the claimant with a liberty to recover it from the vehicle owner. On appeal, the Supreme Court held that the owner alone was liable to pay compensation because the driver lacked a valid licence and the deceased was an unauthorized passenger, and that the insurer's liability was limited to paying the claim and then recovering from the owner. The Court further clarified that if the deposited amount has been withdrawn by the claimant, the insurer may recover it from the owner; otherwise, the amount must be refunded to the insurer. Consequently, the appeal filed by the insurer was allowed and the appeal filed by the vehicle owner was dismissed.

Issues considered

Whether the owner of the vehicle is liable to pay compensation when the driver lacked a valid licence and the deceased was an unauthorized passenger.
Whether the insurer is liable to pay compensation under Sections 3, 4, 10 and 149 of the Motor Vehicles Act despite the driver’s licence deficiency and the passenger’s unauthorised status.
Effect of the driver’s invalid licence on the insurer’s obligation under Section 149.
Whether the amount deposited by the insurer should be released to the claimant or refunded to the insurer, and the mechanism for recovery from the vehicle owner.

Legislation cited

Motor Vehicles Act, 1988s. 10, s. 149, s. 166, s. 3, s. 4

Subjects

motor vehicle accidentthird‑party compensationinsurance liabilitydriver licence validityunauthorised passengerSection 149owner liability

Judgment

[2008] 8 S.C.R. 500

~,..

A NATIONAL INSURANCE CO. LTD.
v.
KAUSHALYA DEVI AND ORS.
(Civil Appeal No. 3542 of 2008)
MAY 13, 2008
B
[S.S. SINHA AND V.S. SIRPURKAR, JJ.]
-·t

Motor Vehicles Act, 1988 - ss. 3, 4, 10 and 149 - Motor
accident - By goods vehicle - Causing death of passenger
c travelling therein - Claim for compensation - Granted by Tri-
bunal holding the Insurance company liable to pay - High
Court holding Insurance Company not liable - However, since
awarded amount already deposited, directed the release
thereof in favour of claimant with liberty to Insurance Com-
pany to recover it from the owner of offending vehicle - On
D >-~,
appeal, held: The owner alone was liable to pay the compen-
sation as driver of the offending vehicle was not holding valid
licence and the deceased was unauthorized passenger - If
deposited amount withdrawn by the claimant, the Insurance
Company to recover it from the owner, and if not withdrawn, to
E refund the amount.

A petition was filed seeking compensation u/s 166 of
Motor Vehicles Act, 1988. The offending vehicle which
caused death of the son of the claimant was insured. In- ~
F surance Company took the objections on the ground that
the driver of the offending vehicle did not possess effec-
tive or valid driving licence and the deceased was travel-
ing as an unauthorized passenger on the truck which was
a goods carriage. Tribunal awarded the compensation. In
appeal High Court held that the Insurance Company was
G
not liable to pay the compensation. However, in view of -'fl
the fact that the amount awarded had already been de-
posited, it was directed to be released in favour of the
claimant with liberty to the Insurance Company to recover
H 500
NATIONAL INSURANCE CO. LTD. v. KAUSHALYA 501
DEVI AND ORS .
... .. that amount from the owner of the offending vehicle. A
Hence the present appeals by the Insurance Company
as also owner of the offending vehicle.
Allowing the appeals filed by the Insurance Company
and dismissing that filed by the owner of the offending
vehicle, the Court B

t HELD: 1. The owner alone was liable to pay com-
pensation to the first respondent for causing death of son
of the claimant by rash and negligent driving on the part
of the driver of the truck. High Court was of the opinion c
that the endorsement permitting the driver to drive heavy
goods vehicle was ante dated and was not existing on
the date of accident. On the relevant date, the driver only
held a licence to drive a light transport vehicle. The provi-
sions relating to the necessity of having a licence to drive a
D
?. vehicle is contained in Sections 3, 4 and 10 of Motor Vehicles
Act, 1988.[Paras 9, 10 and 12] i504-H, 505-A-D, 507-D]
National Insurance Co. Ltd. v. Swaran Singh and Ors.
2004 (3) SCC 297; National Insurance Co. Ltd. v. Laxmi
Narain Dhut 2007 (4) SCALE 36 - relied on. E
Oriental Insurance Company Ltd. v Meena Variyal and
Ors. 2007 (5) SCALE 269; Oriental Insurance Company Ltd.
v. Brij Mohan and Ors. 2007 (7) SCALE 753; Oriental Insur-
ance Co. Ltd. v Prithvi Raj 2008 (1) SCALE 727 - referred to.
t- F
2. The deceased was not the owner of any goods
which were being carried in the truck. Admitted position
is that he had been traveling in the truck for the purpose
of collecting the empty boxes. He was a vegetable dealer.
He was not traveling in the truck as owner of the goods G
viz. the vegetables. He was traveling in the truck for a
~ purpose other than the one for which he was entitled to
'
travel in a public carriage goods vehicle. [Para 13] [507-
E,F]
New India Assurance Co. Ltd. v. Asha Rani and Ors.2003 H
502 SUPREME COURT REPORTS [2008] 8 S.C.R.

A (2) sec 223 - relied on. ...
.

Prem Kumar and Ors. v. Prahlad Dev and Ors. 2008 (1)
SCALE 531; Oriental Insurance Co. Ltd. v. Prithvi Raj 2008 (1)
SCALE 727 - referred to.

B 3. If the amount deposited by the insurance company
has since been withdrawn by the claimant, it would be
open to the insurance company to recover the same in _.,.
the manner specified by the High Court. But if the same
has not been withdrawn, the deposited amount may be
c refunded to the insurance company and the proceedings
for realization of the amount may be initiated against the
owner of the vehicle. [Para 14] [508-C,D]
CIVILAPPELLATEJURISDICTION: CivilAppeal No. 3542
of 2008
D
From the final Judgment and Order dated 5.12.2005 of '!-,
the High Court of Himachal Pradesn at Shimla in FAO No. 223
of 2002
WITH
E
C.A. No. 3552 of 2008
S.L. Gupta, S.S. Yadav, Goodwill lndeevar and Dinesh
Kumar Garg for the Appearing Parties.
The Judgment of the Court was delivered by
F ~-
S.B. SINHA, J. 1. Leave granted.
2. Kishan Lal (deceased) was traveling in a truck bearing
registration No.HP-11-1448 on 16.3.2000. He was aged about
27 years. He was unmarried. The said truck met with an acci-
G dent.

First respondent being the mother of the deceased filed -y
an application for payment of compensation under Section 166 '
of the Motor Vehicles Act, 1988 (The Act). Appellant was served
with a notice. One of the objections taken by it was that the
H
NATIONAL INSURANCE CO. LTD. v. KAUSHALYA 503
DEVI AND ORS. [S.B. SINHA, J.]

driver of the truck did not possess any valid or effective driving A
licence and that the deceased was travelling as an unautho-
rized passenger on the truck which was a goods carriage.

3. The Tribunal awarded a sum of Rs.1, 18,000/- by way of
compensation. An appeal was preferred thereagainst before
the High Court. B

By reason of the impugned judgment, whereas the con-
t
tention of the appellant-insurance company was upheld, having
regard to the fact that the amount awarded in favour of the first
respondent had already been deposited, it was directed to be c
released in favour of the claimant with liberty to the insurance
company to recover the said amount along with interest from
the owner by filing an appropriate application for execution be-
fore the Tribunal without being required to file a separate suit.

4. Both the insurance company as also the owner of the D
truck are, thus, before us.

5. Shri S.L. Gupta, learned counsel appearing on behalf
of the insurance company, would submit that as the deceased
was travelling as a gratuitous passenger and as the driver of
the vehicle was not possessing an effective driving licence, the E
High Court should not have passed the impugned order.

6. Mr. Garg, learned counsel appearing on behalf of the
owner of the vehicle, on the other hand, would contend that the
deceased was a vegetable vendor and he had been travelling F
in the truck for collecting the empty boxes and, thus, he was not
a gratuitous passenger. In any event, it was urged, as the insur-
ance company has already deposited the amount of compen-
sation, the right to recover the amount from the owner of the
vehicle need not have been granted.
G
,... 7. The Tribunal, having regard to the rival contentions of
' the parties, framed the following issues :

"1. Whether deceased Shri Krishan Lal had died
due to the rash and negligent driving of Shri H
504 SUPREME COURT REPORTS [2008] 8 S.C.R.

A Shyam Lal, driver of truck No.HP-11-1448, as
alleged? ... OPP.

2. If issue No.1 supra is proved, to what amount of
compensation the petitioner is entitled to and
from which of the respondents? .. OPP
B
3. Whether the truck driver did not have valid
driving licence on the date of accident, as
alleged, if so, its effect? OPR.3.

4. Whether the documents i.e. route permit, R.C.
c and fitness certificate of the truck, in question,
were not valid on the date of accident as
alleged? ... OPR.3

5. Relief."
D 8. !twas opined by the Tribunal that the driver of the truck
was driving the vehicle rashly and nagligently. It was further-
more held that the truck in question was insured with the appel-
lant insurance company, but it had not been proved that the driver
was not having any valid driving licence.
E With regard to the contention that the deceased was a
gratuitous passenger in a goods vehicle, it was held :
"The evidence, on record, which has been led by the
petitioner would go to show that the deceased was
F traveling in the truck, in question, for bringing empty
vegetable boxes. Further, even if it is taken that the
deceased was traveling in the truck as unauthorized
person, even then, under the existing law, the insurance
company cannot avoid the liability in question. Therefore,
the plea raised by the learned Advocate for the insurance
G
company does not have any force."
_,
9. The High Court, however, held that the driving licence of "
the Driver Shyam Lal was not valid, stating :
"Since I am of the opinion that the endorsement permitting
H
NATIONAL INSURANCE CO. LTD. v. KAUSHALYA 505
DEVI AND ORS. [S.B. SINHA, J.]
.... Shyam Lal to drive heavy goods vehicle was ante dated A
and was not existing on the date of accident it is clear that
the owner could not have handed over the vehicle to a
person who held a valid driving lience. On 16.3.2000
Shyam Lal only held a licence to drive a light transport
vehicle and the owner could not have checked or verified B
the licence for driving a heavy goods vehicle. In fact in this
case the owner has not even stepped into the witness bpx
to say anything in this regard. Therefore, I hold that the
insurance company was wrongly held liable to pay
compensation." c
As regards to the question as to whether the deceased
was an unauthorized passenger, it accepted the plea of the in-
surance company.

10. The provisions reiating to the necessity of having a
D
, )< licence to drive a vehicle is contained in Sections 3, 4 and 10 of
the Act. As various aspects of the said provisions, vis-a-vis, the
liability of the insurance company to reimburse the owner in re-
spect of a claim of a third party as provided in Section 149.
thereof have been dealt with in several decisions, it is not nee-
E
essary for us to reiterate the same once over again. Suffice it
to notice some of the precedents operating in the field ..

In National Insurance Co. Ltd. v. Swaran Singh & Ors.
[(2004) 3 SCC 297], this Court held:
~ F
• "88. Section 10 of the Act provides for forms and contents
of licences to drive. The licence has to be granted in the
prescribed form. Thus, a licence to drive a light motor
vehicle would entitle the holder there to drive the vehicle
falling within that class or description.
G
89. Section 3 of the Act casts an obligation on a driver to
r- 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
H
506 SUPREME COURT REPORTS [2008] 8 S.C.R.

A sub-section (2) of the said section." ... ~

It was furthermore, observed :
"90. We have construed and determined the scope of
sub-clause ( ii) of sub-section (2) of Section 149 of the
B Act. Minor breaches of licence conditions, such as want
of medical fitness certificate, requirement about age of
th.e driver and the like not found to have been the direct -t
cause of the accident, would be treated as minor breaches
of inconsequential deviation in the matter of use of vehicles.
c Such minor and inconsequential deviations with regard to
licensing conditions would not constitute sufficient ground
to deny the benefit of cox~rage of insurance to the third
pa~es. ·•· ·
91. On all pleas of breach of licensing conditions taken by
D the insurer, it would be open to the Tribunal to adjudicate
;._'
the claim and decide inter se liability of insurer and insumd;
although where such adjudication is likely to entail undue
delay in decision of the claim of the victim, the Tribunal in
its discretion may relegate the insurer to seek its remedy
E of reimbursement from the insured in the civil court."
The decision in Swaran Singh, however, was held to be
not applicable in relation to the owner or a passenger of a ve-
hicle which is insured.
F 11. In National Insurance Co. Ltd. v. Laxmi Narain Dhut --1".
[2007 (4) SCALE 36], this Court referring to Swaran Singh (su-
pra) and discussing the law on the subject, held :
"In view of the above analysis the following situations
emerge:
G
1. The decision in Swaran Singh's case (supra) has no
application to cases other than third party risks. ...,
..
2. Where originally the licence was a fake one, renewal
cannot cure the inherent fatality.
H
NATIONAL INSURANCE CO. LTD. v. KAUSHALYA 507
DEVI AND ORS. [S.B. SINHA, J.]
~ . 3. In case of third party risks the insurer has to indemnify A
the amount and if so advised, to recover the same from
the insured.
4. The concept of purposive interpretation has no
application to cases relatable to Section 149 of the Act.
B
The High Courts/Commissions shall now consider the
t mater afresh in the light of the position in law as delineated
above.
{See also Oriental Insurance Company Ltd. v. Meena
Variyal & Ors. [2007 (5) SCALE 269]; Oriental Insurance Com- c
pany Ltd. v. Brij Mohan & Ors. [2007 (7) SCALE 753]; and
Oriental Insurance Co. Ltd. v. Prithvi Raj [2008 (1) SCALE
727]}.
12. In view of the findings arrived at by the High Court, it
D
, ... must be held that the owner alone was liable to pay compensa-
tion to the first respondent herein for causing death of her son
by rash and negligent driving on the part of the driver of the
truck. The High Court's judgment must be sustained on this
ground.
E
13. The deceased was not the owner of any goods which
were being carried in the truck. Admitted position is that he
had been traveling in the truck for the purpose of collecting the
empty boxes. He was a vegetable dealer. He was not traveling
j- in the truck as owner of the goods viz. the vegetables. He was F
• traveling in the truck for a purpose other than the one for which
he was entitled to travel in a public carriage goods vehicle.
This aspect of the matter is squarely covered by the deci-
sion of this Court in Brij Mohan (supra) wherein the Bench cited
with approval the decision in New India Assurance Co. Ltd. v. G
Asha Rani & Ors. [(2003) 2 SCC 223] wherein it was stated :
r,
"26. In view of the changes in the relevant provisions in the
1988 Act vis-a-vis the 1939 Act, we are of the opinion that
the meaning of the words "any person" must also be
H
508 SUPREME COURT REPORTS [2008] 8 S.C.R.

A attributed having regard to the context in which they have
been used i.e. "a third party''. Keeping in view the
, .. ,...

provisions of the 1988 Act, we are of the opinion that as
the provisions thereof do not enjoin any statutory liability
on the owner of a vehicle to get his vehicle insured for any
l3 passenger travelling in a goods vehicle, the insurers would
not be liable therefor."

{See also Prem Kumar & Ors. v. Prahlad Dev & Ors. -t
[2008 (1) SCALE 531] and Oriental Insurance Co. Ltd. v. Prithvi
Raj [2008 (1) SCALE 727]}.
c
14. For the reasons aforementioned, Civil Appeal arising
out of SLP (C) No. 10694 is allowed and Civil Appeal arising
out of SLP (C) No. 9910 of 2006 is dismissed. If the amount
deposited by the insurance company has since been withdrawn
by the first respondent, it would be open to the insurance com-
D
pany to recover the same in the manner specified by the High ;i
Court. But if the same has not been withdrawn the deposited '
amount may be refunded to the insurance company and the pro-
ceedings for realization of the amount may be initiated against
the owner of the vehicle. In the facts and circumstances of the
E case, however, there shall be no order as to costs.

K.K.T. Civil Appeal No. 3542/08 allowed

Civil Appeal No. 3552/08 dismissed.

~

,.,