RAM BABU v. UNITED INDIAN INSURANCE CO. LTD. & ORS

Citation: [2008] 11 S.C.R. 725

Court: Supreme Court of India

Bench: S.B. SINHA, CYRIAC JOSEPH

Case summary

RAM BABU v. UNITED INDIAN INSURANCE CO. LTD. & ORS.pdf

Judgment text

[2008] 11 S. C. R. 725 RAM BABU TIWAR1 v. UNITED' INDIAN INSURANCE CO. · LTD. & ORS. (Civil Appeal No. 4749 of 2008) AUGUST 1, 2008 (S. B. SINHA AND CYRIAC JOSEPH~ JJ. ] Motor Vehicles Act, 1988; Ss. 15, 147 and 159: Motor vehicle accident - Death of two persons - Compensation - Contract of insurance - Breach of condition - Liability of insurer~ Held: On the date of accident, the driver of the vehicle did not hold any licence - Breach of the contract of-insurance established - Hence, High Court rightly held that insurer not liable to indemnify the insured -·Contract... ;.. Breach . o(condition. · . ,. Driving Licence - Renewal - Effective date in the context of insurance claim. Relatives of claimant were travelling in a truck, which met with an accident. One of the relatives died on the spot and the other was admitted to a hospital where he suecumbed to the injuries. Dependants of the deceased per-sons filed a petition claiming compensation.

The Tribunal passed an award holding the respondent-Insurance company liable to indemnify the insured. The appeal pre- ~ferred thereagainst by the Insurer was allowed by the High Court holding that since the driver of the vehicle was not holding a valid licence on the date of the accident, the· insurer could not be held liable to indemnify the insured. Hence the. present appeal. Appellant contended that although the driver of the tractor did not hold any licence for certain period, but having regard to the provisions contained in S~ction 15 of the Motor Vehicles Act, 1988 and in particular the sec- ~ ond proviso appended to sub-section (4) thereof, it must be held that the renewal of licenc'>~ would take effect from retrospective date; and that in any view of the matter in view of the decision of this Court in National Insurance Co. Ltd. v. Swaran Singh & Ors. , tha respondent cannot escape its liability so far as a third party is concerned in view of Sections 147 and 149 of the Act.

+ 10. Section 147 of the Act mandates obtaining of compulsory insurance in relation to a third party by the owners of the motor vehicles. Section 149 imposes a duty on the insurer to satisfy the judgments and awards against the insured in respect of third party risks. Sub-section (2) of Section 149 however postulates that insurance company would have a right lo defend the action, inter alia. on a ground that there has been a ~ breech of specified condition of the policy as specified in various sub-clauses; clau~e (ii) thereof being as under : "(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by I )r , any person who has been disqualified for holding or I obtaining a driving licence during the period of I . disqualification; or" '~ 11. In view of the aforementioned provisions, in the event defence on the part of the insurance company that the vehicle invO'lved in the ac'Cident was n9t being driven by a driver having I r .

valid driving licence would be a yalid one. ' The questionas to what would constitute a breach of conditions of the contract of insurance came up for consideration before this Court in -. ::. ;waran Singh (supra). Our attention has been drawn to p·aragraph 39 to 44 of the said decision which · read as under : ' "39. The question as to whether an insurer can avoid its liability in the event it raises- a . defence as envisaged . in sub:-section· (2) of Section 149 of. the Act corresponding to .. syb,-section (2) of '5eGtion. 96 of ~he Motor Vehicles Act, 1939 had . been the subject-matter of decisions jr. i a . large number of oases. 40. Ii is beyond- any d_oubt or ·dispute that under ·section 149(2) of the Act, an insurer, t6 whom notice of the bringing ofany proce. eding for compensation has been given, can . defend. the action on any ofthe grounds mention~d therein. 41.

However, clause (a) opens with the words "that there has been a breach of a specified condition of the policy", implying that the insurer's defence of the -action wo:uld . depend upon the terms of the poli. cy,The said sub-clause - contains three conditions. of disjunctive-cnaracter, name. ly, ·,. the-insurer can get away fromthe liability wh~n (a) a named person drives the vehicle; (b) it was being driven· QY a person who·did not have a duly granted licence;. and (c) driver is a person qisqualified for holding or obtainir:ig . a driving licence. · CO. LTD. & ORS [S. S. SINHA, J. ] 42. We may also take note of the fact that whereas in Section 3 the words used are "effective licence", it has been differently worded in Section 149(2) i. e. "duly licensed". If a person does not hold an effective licence as on the date of the accident, he may be liable for prosecution in terms of Section 141 of the Act but Section 149 pertains to insurance as regards third-party risks . ... --+ 43.

A provision of a statute which is penal in nature vis-avis a provision which is beneficent to a-third party must be interpreted differently. It is also well known that the provisions contained in different expressions are ordinarily construed differently. 44. The words "effective licence" used in Section 3, therefore, in our opinion, cannot be 'imported for subsection (2) of Section 149 of the Motor Vehicles Act. We must also notice that the words "duly licensed" used in sub-section (2) of Section 149 are used in the past tense. " '>' 12. This Court, no doubt, laid down general principles in the aforementioned paragraphs but a bare perusal of the said judgment would clearly show that the court considered the effectof various fact situations therein separately. While considering the question as regards the liability of the insurer when, admittedly, no licence was obtained by a driver, it was held : "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 ·-t 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, wher·e the driver of the vehicle, admittedly, did not hold any licence and the same 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. )" 13. The question as to whether the owner of a vehicle had taken care to inform himself as to whether the driver entrusted to drive the vehicle was having a licence or not is essentially a question fact. However, in this case, it stands admitted ·that as on the date of accident, namely, on 27. 1. 1996, the driver did not hold any licence. Furthermore, it is beyond dispute that he had a licence only for one year and for about 3 years thereafter, he failed and neglected to renew his licence. His licence was renewed only on and from 7. 2. 1996. )t_· 14. What would be the effect of not having a licence for I . ,.. such a long period is the question. t 15. Section 15 of the Motor Vehicles Act provides for renewal of a driving licence. Sub-section (1) of Section 15 and ,l ,.

the first proviso appended thereto read as under : . ,_ Jr. "Section 15. -Renewal of driving licences-(1) Any licensing authority may, on application made to it, renew a driving licence issued under the provisions of this Act with effect from the date of its expiry: + Provided that in any case where the application for the renewal of a licence is made more than thirty days after the date of its expiry, the driving licence shall be renewed with effect from the date of its renewal: Provided further that where the application is for the }renewal of a licence to drive a transport vehicle or where ' ~ in any other case the applicant has attained the age of forty years, the same shall be accompanied by a medical r certificate in the same form and in the same manner as is referred to in sub-section (3) of section 8, and the provisions of sub-section (4) of section 8 shall, so far as may be, apply in relation to every such case as they apply in relation to a learner's licence. " 8 16.

Sub-section (4) of Section 15 of the Act provides that ,;i- ' where an application for the renewal of a driving licence is made more than 30 days after the date of its expiry, the fee payable for such renewal shall be such amount as may be prescribed by the Central Government. The second proviso appended thereto whereupon strong reliance has been placed by Mr. Gupta reads as under: "Provided further that if the application is made more than five years after the driving licence has ceased to be effective the licensing authority may refuse to renew the driving licence unless the applicant, undergoes and passes to its satisfaction the test of competence to drive -~ referred to in sub-section (3) of section 9. " 18.

It is beyond any doubt or dispute that only in the event an application for renewal of licence is filed within a period 30 days from the date of expiry thereof, the same would be ren~wed automatically which means that even if an accident had taken place within the aforementioned period, the driver may be held to be possessing a valid licence. The proviso appended to sub-section (1) of Section 15, however, clearly states that the driving licence shall be renewed with effect from the date of its --t renewal in the event the application for renewal of a licence is made more than 30 days after the date of its expiry. It is, therefore, evident that as, on renewal of the licence on such terms, the driver of the vehicle cannot be said to be holding a valid ~ licence, the insurer would not be liable to indemnify the insured. The second proviso appended to sub-section (4) of Sec- ~ tion 15 is of ·no assistance to the appellant.

It merely enables the licensing authority to take a further test of competent driving and passing thereof to its satisfaction within the meaning of Sub.. .. 'isection (3) of Section 9. It does not say that the renewal would be automatic. It is, therefore, a case where a breach. of the contract of insurance is established. This aspect of the matter has been considered by this Court in National Insurance Co. Ltd. v Kusum Rai& Ors. ((2006) 4 SCC 250] holding : "11 .. It has not been disputed before us that the ·vehide -r--, was being used as a taxL It was, therefore, a commercial vehicle. " The driver of the said vehicle, thus, was reql. iired to h·old an appropriate licence therefor. Ram Lal who 1-allegedly was driving the said vehicle at the relevanttlme, t 1-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. r The appellant, therefore, could raise the said defence. " I It was furthermore held : ~ ,. _. 4 "14. T~is Court in Swarf! n Singh 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 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 licen~e to drive the vehicle. " I .. _ It was opined : · "16. In a case of this nature, therefore, the owrn? r of a +- I . vehicle can_not contend that h~ ha·s no liability to verify the ( fact as to whether the. driver of the vehicle possessed a valid licence or not. " r '· 19. The. pri_nciple laid down in Kusum Rai (supra) has been ;I reiterated in lshwar Chandra & Ors. v. Oriental Insurance Co. I f. Ltd. & Ors.

[(2007) 10 SCC 650], referring fo sub-section (1) of .... ,_ Section 15 of the Act, this Court stated the law, thus : "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 thereof is filed thereafter, the same would be renewed from the date of its renewal. The. accident took place 28-4-1995. 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. " 20. For the reasons aforementioned, there is no 1nfirmity in the impugned judgment. The appeals are, therefore, dismissed. However, in the facts and circumstances of the case, there shall be no order as to costs. S. K. S.

Appeals dismissed .