Supreme Court of India
NATIONAL INSURANCE CO. LTD.versusVIDHYADHAR MAHARIWALA & ORS.
- Citation
- 2008 INSC 1052
- Decided
- 17 September 2008
- Disposal
- Appeal(s) allowed
- Bench
- ARIJIT PASAYAT
Holding
The insurer is not liable to pay the compensation because the driver did not hold a valid licence at the time of the accident.
Summary
The case concerned a motor accident on 11 June 2004 in which the driver’s licence had lapsed at the time of the crash. The Motor Accident Claims Tribunal awarded Rs.4,03,650 to the claimant, but the insurer, National Insurance Co., refused to pay, arguing that the driver was not holding a valid licence and therefore the insurer was exempt under the policy. The High Court upheld the Tribunal’s award, rejecting the insurer’s objection. On appeal, the Supreme Court examined earlier decisions, notably Ishwar Chandra v. Oriental Insurance (where the insurer was held not liable) and other cases holding that a temporary lapse in licence does not automatically exonerate the insurer. Aligning with Ishwar Chandra, the Court held that the insurer was not liable to pay the award and set aside the High Court order, directing the claimant to recover the amount from the vehicle owner.
Issues considered
- Whether an insurer is liable to pay compensation under the Motor Vehicles Act when the driver of the insured vehicle did not possess a valid driving licence at the time of the accident.
Legislation cited
- Indian Evidence Act, 1872s. 114
- Motor Vehicles Act, 1988s. 10, s. 14, s. 15, s. 173, s. 3
Subjects
Motor accidentInsurance liabilityDriving licence validityMotor Vehicles ActCompensation awardPolicy exemption
Judgment
[2008] 13 S.C.R. 604
A NATIONAL INSURANCE CO. LTD.
\I.
VIDHYADHAR MAHARIWALA & ORS.
(Civil Appeal No. 5721 of 2008)
B SEPTEMBER 17, 2008
(DR. ARIJIT PASAYAT AND HARJIT SINGH BEDI, JJ.)
Motor Vehicles Act, 1988 - & 173:
c when Motor vehicle accident - Claim -Award - Liability of insurer
driver not holding valid licence - Held: Insurer not liable.
The question which arose for determination in this
appeal was as to whether the Insurer is liable to pay the
D
amount awarded by the Motor Accident Claims Tribunal
to claimant in a motor vehicle accident when the driver of
the vehicle was not holding a valid licence while driving
'( .
the vehicle which met with an accident.
Appellant-insurer contended that in view of the judg-
E
ment of this Court in lshwar Chandra and Ors. Vs. Oriental
Insurance Co. Ltd. & Ors., insurer is not liable to pay com-
pensation to the claimant when the driver of the vehicle
was not possessing valid driving licence on the day of
F the accident.
Allowing the appeal, the Court
HELD: In /shwar Chandra's case, it was held by this
Court that the insurance company would have no liabil-
G ity in the case of this nature. This Court is in agreement
with the view. Hence, the impugned order is set aside. It
is open to the claimant to recover the amount from re-
H 604
NATIONAL INSURANCE CO. LTD. v. VIDHYADHAR 605
MAHARIWALA & ORS.
spondent No.2. (Para - 11) [609 H 610 A BJ A
lshwar Chandra and Ors. Vs. Oriental Insurance Co. Ltd.
& Ors. (2007) 10 SCC 650; National Insurance Co. Ltd. vs.
Swaran Singh & Ors. (2004) 3 SCC 297; National Insurance
Co. Ltd. vs. Kusum Rai & Ors. (2006) 4 SCC 250 and Orlen- B
ta( Insurance Co. Ltd. vs. Nanjappan & Ors. (2004) 13 SCC
224 - relied on.
Case Law Reference
(2001) 1o sec 650 Relied on Para -6
c
(2004) 3 sec 297 Relied on Para~ 5
(2006) 4 sec 250 Relied on Para· 5
(2004) 13 sec 224 Relied on Para - 5 D
r CIVILAPPELLATE JURISDICTION: Civil Appeal No. 5721
of 2008
From the Final Judgment and Order dated 13.2.2007 of E
the High Court of Judicature for Rajasthan at Jodhpur in S.S.
Civil Misc. Appln. No. 948/2007
Dr. Meera Agarwal for the Appi:llant.
Devashish Bharuka, Alok Sangwan, Jaya Bharuka and F
Hansa Bharuka for the Respondents.
The Judgment of the Court was delivered by
Dr. ARIJIT PASAYAT, J. 1. Leave granted.
G
2. Challenge in this appeal is to the judgment of a learned
Single Judge of the Rajasthan High Court at Jabalpur dismiss-
ing the appeal filed by the appellant under Section 173 of the
Motor Vehicles Act, 1988 (in short the 'Act'). Challenge in the
H
606 SUPREME COURT REPORTS [2008] 13 S.C.R.
A appeal was to the award made by the Motor Claims Appellate
Tribunal, Ratangarh (Churu) (in short 'MACT) in Claim Case
No.89 of 2004. By the said award, a sum of Rs.4,03,650/- was
awarded to the claimant-respondent No.1 in the appeal. The
dispute related to the rejection of appellant's claim for exonera-
8
tion on the ground of violation of policy condition. It was pointed
out that the driving license of the driver of the offending vehicle
was not in force on the date of accident.
C 3. Factual position in detail need not be indicated because
the issue relates to the liability of the insurance company as the
driving license was not valid on the date of the accident.
4. In the instant case the date of accident was 11.6.2004.
The driver's license was initially valid for the period from
D 15.12.1997 to 14.12.2000 and thereafter from 29.12.2000 to
14.12.2003. Thereafter, it was again renewed from 16.5.2005
to 15.5.2008. The appellant filed its objections before MACT
taking the stand that since the driving license was not valid on
E the date of accident it had no liability. The MACT turned down
the plea. According to it though on the date of accident the driv-
ing license was not valid, since the driver's license was renewed
on 16.5.2005 for a further period of three years it cannot be
said that during the intervening period the driver was incompe-
F
tent or disqualified to driver the truck. With reference to Section
114 of the Indian Evidence Act, 1872 (in short the 'Evidence
Act') it was held that at the time of accident driver was compe-
tent to drive the vehicle.
G 5. In appeal by the impugned judgment the High Court re-
ferred to three judgments of this Court in National Insurance
Co. Ltd. v. Swaran Singh and Ors. (2004 (3) SCC 297), Na-
tional Insurance Co. Ltd. v. Kusum Rai and Ors. (2006 (4) SCC
H 250) and Oriental Insurance Co. Ltd. v. Nanjappan and Ors.
--
NATIONAL INSURANCE CO. LTD. v. VIDHYADHAR 607
MAHARIWALA & ORS. [DR. ARIJIT PASAYAT, J.]
~
(2004 (13) sec 224) and came to hold that the insurance com- A
pany, the insurer was liable to indemnify the award. It was held
that merely there was a gap in the renewal of driving license
that cannot be a ground for exoneration.
'} 6. In support of the appeal, placing reliance on the deci- B
sion of this Court in lshwar Chandra and Ors. v: Oriental Insur-
anee Co. Ltd. and Ors. (2007 ( 10) sec 650), it was contended
that the High Court's view is unsustainable.
7. Learned counsel for respondent No.2 the owner of the c
vehicle on the other hand supported the judgment of MACT.
8. In Swaran Singh's case (supra) whereupon the respon-
dent no.2 relied, it was held as foliows:
D
"45. Thus, a person whose licence is ordinarily renewed
.\
-p in terms of the Motor Vehicles Act and the Rules framed
thereunder, despite the fact that during the interregnum
period, namely, when the accident took place and the date
of expiry of the licence, he did not have a valid licence, he E
could during the prescribed period apply for renewal
thereof and could obtain the same automatically without
undergoing any further test or without having been decl~red
unqualified therefor. Proviso appended to Section 14 in
unequivocal terms states that the licence remains valid for F
a period of thirty days from the day of its expiry.
46. Section 15 of the Act does not empower the authorities
to reject an application for renewal only on the ground that
there is a break in validity or tenure of the driving licence G
has lapsed, as in the meantime the provisions for
disqualification of the driver contained in Sections 19, 20,
.,, 21, 22, 23 and 24 will not be attracted, would indisputably
confer a right upon the person to get his driving licence H
608 SUPREME COURT REPORTS [2008] 13 S.C.R.
r -
A renewed. In that view of the matter, he cannot be said to
be delicensed and the same shall remain valid for a period
of thirty days after its expiry."
9. In Kusum Rai's case (supra) it was held as follows:
B
14. This Court in Swaran Singh (2004 (3) SCC 297) clearly
laid down that the liability of the Insurance Company vis-
a-vis the owner would depend upon several factors. The
owner would be liable for payment of compensation in a
c 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-a-vis the driver being not possessed of a
D
valid licence was considered in Swaran Singh stating:
(SCC pp. 336-37, para 89) y -
"89. Section 3 of the Act casts an obligation on a
driver to hold an effective driving licence for the type
E 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 sub-section (2) of the said
F section. The various types of vehicles described for
which a driver may obtain a licence for one or more
of them are: (a) motorcycle without gear, (b)
motorcycle with gear, (c) invalid carriage, (d} light
motor vehicle, (e) transport vehicle, (f) road roller,
G and (g) motor vehicle of other specified description.
The definition clause in Section 2 of the Act defines
various categories of vehicles which are covered in
~·
broad types mentioned in sub-section (2) of Section
H 10. They are 'goods carriage', 'heavy goods vehicle',
NATIONAL INSURANCE CO. LTD. v. VIDHYADHAR 609
MAHARIWALA & ORS. [DR. ARIJIT PASAYAT, J.]
'heavy passenger motor vehicle', 'invalid carriage', A
'light motor vehicle', 'maxi-cab', 'medium goods
vehicle', 'medium passenger motor vehicle', 'motor-
cab', 'motorcycle', 'omnibus', 'private service
)..
vehicle', 'semi-trailer', 'tourist vehicle', 'tractor',
B
'trailer' and 'transport vehicle'. In claims for
compensation for accidents, various kinds of
breaches with regard to the conditions of driving
licences arise for consideration before the Tribunal
as a person possessing a driving licence for c
'motorcycle without gear', [sic may be driving a
vehicle] for which he has no licence. Cases may also
arise where a holder of driving licence for 'light motor
vehicle' is found to be driving a 'maxi-cab', 'motor-
D
~ cab' or 'omnibus' for which he has no licence. In each
case, on evidence led before the Tribunal, a decision
has to be taken whether the fact of the driver
possessing licence for one type of vehicle but found
driving another type of vehicle, was the main or E
contributory cause of accident. If on facts, it is found
that the accident was caused solely because of some
other unforeseen or intervening causes like
mechanical failures and similar other causes having
·~
F
no nexus with the driver not possessing requisite
type of licence, the insurer will not be allowed to avoid
its liability merely for technical breach of conditions
concerning driving licence."
G
10. Nanjappan's case (supra) was referred to in Kusum
Rai's case (supra).
~ 11. In lshwar Chandra's case (supra) the three decisions
referred to by the High Court were considered and it was held
H
610 ~ UPREME COURT REPORTS [2008] 13 S.C.R.
A that the insurance company would have no liability in the case
of this nature. We are in agreement with the view. The appeal
deserves to be allowed which we direct. The impugned order
of the High Court is set aside. It is open to the claimant to re-
B cover the amount from respondent No.2.
S.K.S. Appeal allowed.
..,.
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