NEW INDIA ASSURANCE CO. LTD.versusMANDAR MADHAV TAMBE AND ORS.

                NEW INDIA ASSURANCE CO. LTD.                                      A
                             v.
               MANDAR MADHAV TAMBE AND ORS.

                           DECEMBER 14, 1995

               [S.P. BHARUCHA AND B.N. KIRPAL, JJ.]                               B

      Motor Vehicle Act, 193!)-Sections 96(2)(b)(ii), 2(5-A) & Bombay
Motor Vehicle Rules, 195r>-Rule 16--0btaining driving licence during the
period of disqualification-Wliether company is entitled to invoke the
provision-Special provision in the insurance Policy-Whether the insurance         C
Policy absolves the insurance Company of any liability.

      WORDS & PHRASES :

      Driving Licenc~Meaning of-Section 2(5-A), Motor Vehicle Act,
~                                                                                 D
       An accident occurred involving two scooters. Respondent No. 1 filed
an application before the Motor Accident Claims Tribunal for compensa-
tion. The respondent No. 3 had a learner's licence, which had expired one
and half year before the accident. Therefore, when the accident took place        E
Respondent No. 3 was neither holding a driving licence nor holding a
learner's licence. Soon after the accident he obtained a fresh learner's
licence and within two days obtained a driving licence. The Tribunal made
an award directing respondent Nos. 1 to 3 including the insurance Com-
pany, to jointly or separately pay the amount awarded together with
interest at the rate of 6% per annum. On appeal the High Court held that          F
the Act did not contemplate the grant of a permanent driving licence and
the term 'duly licensed' in section 96(2) (b) (ii) of the Act would include the
holder of a learner's licence if he had once held such a licence then the
exclusion clause would not be applicable.

       Being aggrieved by the judgment of the High Court, the ap1iellant G
filed Petition for Special Leave to Appeal. The two questions which arise
for consideration in this appeal are: (i) Whether the appellant company
is entitled to invoke the provisions of Section 96(2)(b)(ii) of the Motor
Vehicle Act (ii) Whether the exclusion clause in the Insurance Policy
absolves the appellant company of any liability.                          H
                                    687
    688                  SUPREME COURT REPORTS [1995] SUPP. 6 S.C.R.

A         Allowing the Appeal, this Court

          HELD : 1. A valid driving licence as contemplated by the Motor
    Vehicle Act would be one, which is issued in accordance with the provisions
    of chapter II of the Motor Vehicies Act, 1939, after a driving test has been
    held. [691-F]
B
          2. A person would be regarded as being dnly licenced only if he has
    obtained a licence under Chapter Hof the Motor Vehicles Act and a person
    who has obtained a temporary licence which enable him to learn driving
    cannot be regarded as having been duly licencesed. (692-FJ

C         United India Insurance Co. Ltd. v.      Tilak Ram, (1985) ACJ 481
    overruled.

          3. The use of the words "permanent driving licence" in the insurance
    policy was to emphasise that a temporary or a learner's licence holder
D   would not be covered by the insurance policy. The intention and meaning
    of the policy clearly is that the person driving the vehicle at the time of
    accident must be one who holds a 'driving licence' within the meaning of
    Section 2(5A) of the Act. (693-C]

          4. Insurance Company, in case of an accident, would be liable only
E   if a person holding a valid driving licence or a permanent driving licence
    "other than a learner's licence" was driving the vehicle. (693-A]

          CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3486/86.

          From the Judgment and Order dated the 5th February, 1986 of the
F High Court of Judicature at Bombay in First Appeal No. 965 of 1984.
          S.M. Suri and Pramod Dayal for the Appellants.

         M.D. Adkar, S.D. Singh and Ejaj Maqbool for Respondent No. 1,
    B.N. Naik and A.M Khanwilkar for Respondent No. 2.
G
          The following Order of the Court was delivered :

          This is an appeal by special leave against the judgment of the Bombay
    High Court upholding the liability of the appellant Insurance Company to
    pay the amount of compensation awarded to respondent No. l who had
H   suffered some injuries as a result of an accident.
           NEW INDIAASSURANCE CO. LTD. v. M.M. TAMBE                     689

       On 4th July, 1979, an accident occurred iovolving two scooters. One      A
scooter No. (MTM 6327) was being driven by respondent No. 1 (the
claimant) and the other scooter (BYZ 5348) was being driven by respon-
dent No. 3. As a result of this accident respondent No. 1 suffered some
injuries and he filed an application before the Motor Accident Claims
Tribunal for compensation.
                                                                                B
       The appellant contested the said application. It was contended on its
behalf that on 22nd July, 1977, respondent No. 3 had obtained a learner's
licence, wlrich enabled him to drive for the purpose of learning to drive.
The Validity of this learner's licence had expired on 21st November, 1977.
When the accident took place on 4th July, 1979, respondent No. 3 was            C
neither holding a driving licence as contemplated by the Motor Vehicles
Act, 1939, nor was he holding a learner's licence. It appears that soon after
the accident resr~ndent No. 3 obtained a fresh learner's licence on 7th
July, 1979 and thereafter, on 9th July, 1979, obtained a driving licence.

       The Motor Accident Claims Tribunal, vide its award dated 2nd June, D
1984, came to the conclusion that the accident had occurred due to the
negligence of respondent No. 3. It found that respondent No. 1 was entitled
to compensation of Rs. 2,60,000. An award was accordingly passed direct-
ing respondents 1 to_ 3 therein, including the appellant Insurance company,
to jointly or separately pay the said amount together with interest at the E
rate of 6% per annum.

      The appellant filed an appeal against the said award. The main
contention which was raised on behalf of the appellant was that respondent
No. 3 was not duly licensed to drive a scooter, and therefore, in view of
the provisions of the Motor Vehicles Act and also in view of one specific       F
clause which had been inserted in the Insurance Policy, the insurance
company was absolved of all liability. This exclusion clause in the policy
which the appellant company relied upon, is as follows :

        "Provided that the person driving holds a valid driving licence at
        the time of the accident or had held a permanent driving licence        G
        (other then a learner's licence) and is not disqualified from holding
        such a licence.'

     The High Court came to the conclusion that the Act did not con-
template the grant of the permanent driving licence. It then proceeded to H
    690                   SUPREME COURT REPORTS [1995] SUPP. 6 S.C.R.

A hold that the term 'duly licence' in section 96(2)(b)(ii) of the Act would
    include the holder of a learner's licence if he had once held such a licence
    then the aforesaid exclusion clause would not be applicable.

         While granting leave to appeal this Court made it clear that the leave
    was being granted on the condition that the appellant herein would pay the
B   amount awarded to the claimant, irrespective of the result of the case.

          On behalf of the appellant it has been contended by Mr. Suri that at
    the time when the accident occurred respondent No. 3 did not hold any
    licence. This being so the aforesaid provisions in the insurance policy and
C   also Section 96(2)(b)(ii) of the Act absolved the appellant of any liability.

           Learned counsel for the respondent relied upon the observations of
    the judgment under appeal and also on a similar view taken in the decision
    of the High Court of Himachal Pradesh i11 United India Insura11ce Company
    Ltd. v. Tilak ram & Ors., (1985) ACJ 481 and submitted observations of the
D   judgment under appeal and also on a similar view taken in the decision of
    the High Court of Himachal Pradesh in United !11dia fllsurance Company
    Ltd. v. Tilak Ram and others (1985} ACJ 481 and submitted that inasmuch
    as respondent No. 3 had held a learner's licence at one point of time, the
    insurance company was liable to pay the amount of compensation which
E   had been awarded.

            The two questions which arise for consideration in this appeal are,
    firstly, whether the appellant company is entitled to invoke the provisions
    of Section 96(2)(b)(ii) of the said Act, and, secondly whether the above
    quoted exclusion clanse in the insurance policy absolves the appellant
F   company of any liability in the present case.

          In order to appreciate the first contention, it is necessary to refer to
    the relevant provisions of the said Act. Section 96(2)(b)(ii), on which
    reliance is placed by the appellant, reads as under :

G            "(2) No sum shall be payable by an insurer under sub- section (1)
             in respect of any judgment unless before or after the commence-
             ment of the proceedings in which the judgment is given the insurer
             had notice through the court of the bringing of the proceedings,
             or in respect of any judgment so long as executibn is stayed thereon
H            pending an appeal; and an insurer to whom notice of the bringing
            NEW INDIAASSURANCE CO. LID. v. M.M. TAMBE                    691

         of any such proceedings is so given shall be entitled to be made a    A
         party thereto and to defend the action on any of the following
         grounds, namely :                                    '
      (a) ----------

      (b} That there has been breach of a specified condition of.the policy,   B
being one of the following conditions, namely :

      (1) ----------

       (ii) a condition exclusive driving by a named person or persons or by C
a person who is not duly licenced or by any person who had been dis-
qualified for holding or obtaining a driving licence during the period of
disqualificatim, : of'

     This clause, inter alia, uses the expression "driving licence" which
term has been defined in Section 2(5A) of the Act as follows :                 D
        "Driving Licence" means the document issued by a competent
        authority under Chapter II authorising the person specified therein
        to drive a motor vehicle or a motor vehicle of any specified class
        or description."
                                                                               E
       Section 3 inter alia provides that no person shall drive a motor
vehicle unless he holds an effective driving licence issued to him. Section
7 provides for the grant of a driving licence and sub-section (6) thereof
states that no driving licence shall be issued to any applicant unless he
passes, to the satisfaction of the licensing authority, the test of competence F
to drive as specified in the 3rd Schedule. It is clear, therefore, that a valid
driving licence as contemplated by the said Act would be one which is
issued in accordance with the provisions of chapter II of the Motor
Vehicles Act, 1939, after a driving test has been held. A person who holds
only a learner's licence is one who has not taken the driving test success-
fully. Chapter II af the Acts does not make anr mention of a learner's G
licence, except in Section 21(2}(c) which enables the State Govermnent to
frame rules, inter alia, for the issue of temporary licences to persons
receiving instruction in driving. It is in view of this that in the Bombay
Motor Vehicles Rules a provision (Rule 16} has been made, the relevant
portion of which is as under :                                                  H
    692                      SUPREME COURT REPORTS [1995] SUPP. 6 S.C.R.

A            16. Learner's driving licence -

                 (i). Sub-Section (I) of Section 3 shall not apply to any person
             driving a motor vehicle in a public place during the course of
             receiving instruction or of gaining experience in driving with object
             of presenting himself for the test required by sub-section (6) of
B            Section 7 so long as -

                (i) the driver is the holder of a learner's driving licence in Eorn
             L Lt. to those rules entitling him to drive the vehicle.

                 (ii) xxxx
c
                (iii) there is besides the driver in the vehicle as instructor a
             person duly licenced to drive the vehicle and sitting in such a
             position as to be able readily to stop the vehicle.

D          From the aforesaid it is clear that what was obtained by respondent
    No. 3 from the authorities under the Act was not a licence within the
    meaning of Section 2(5A) of the said Act. He had obtained a learner's
    licence which allowed him to be on the road subject to his fulfilling the
    conditions contained therein. One of the important conditions was that if
E   he was driving a motor vehicle then there must be beside; him in the
    vehicle as an instructor a person duly licenced to drive the vehicle and
    sitting in such a position as to be able readily to stop the vehicle." It is clear
    from this that two learners by themselves cannot be in one car which is
    being driven by one of them. If the learner having a learner's licence under
    the rules is to drive car then he must have sitting besides him a person who
F   is duly licenced. This clearly shows that a "driving licence" as defined in
    the Act is different from a learner's licence issued under Rule 96. In other
    words, a person would be regarded as being duly licenced only if he has
    obtained a licence under Chapter II of the Motor Vehicles Act and a
    person who has obtained a temporary licence which enables him to learn
G   driving cannot be regarded as having been duly licenced. The decision of
    the single judge of the Himachal Pradesh High Court in United India
    Insurance Company's case (supra) to the extent to which he has taken a
    contrary view must be held to have been incorrectly decided.

        Apart from the fact that a learner having such a licence would not
H be regarded as duly licenced, the aforesaid clause in the insurance policy
               NEW INDIA ASSURANCE CO. LID. v. M.M. TAMBE                      693

    makes it abundantly clear that the insurance company, in the event of an          A
    accident, would be liable only if the vehicle was being driven by a person
    holding a valid driving licence or a permanent driving licence "other then
    a learner's licence". This clause specifically provides that even if respondent
    No. 3 had held a current learner's licence at the time of the accident, the
    appellant would not be liable. In the present case it is clear that the           B
    respondent No. 3 did not have a permanent learner's licence before the
    date of the accident and he had held only a learner's licence and it lapsed
    nearly two years before the accident. The High Court observed that the
    Act did not contemplate a "permanent driving licence" because a driving
    licence is valid only for a certain period after which it has to be renewed.
_.- This may be so, but the use of the words "permanent driving licence" in the       C
    insurance policy was to emphasise that a temporary or a learner's licence
    holder would not be covered by the insurance policy. The intention and
    meaning of the policy clearly is that the person driving the vehicle at the
    time of the accident must be one who holds a 'driving licence' within the
    meaning of Section 2(5A) of the Act. This being so, we are unable to agree        D
    with the conclusions of the High Court that the appellant was liable to pay
    the amount which had been awarded in favour of respondent No. 1.

          From the aforesaid reasons, the appeal is allowed but with no order
   as to costs. Having regard to the condition imposed at the time of the grant
   of special leave.that irrespective of the outcome of this appeal, the amount       E
   awarded will be paid by the appellant to the claimants, no other relief can
   be granted to the appellant.

   R.S.                                                          Appeal allowed.