RAM BABU TIWAR1 v. UNITED' INDIAN INSURANCE CO.· LTD. & ORS.

The Judgment of the Court was delivered by

S ..B. SINHA, J. 1. Leave granted. c

2Copy pinpoint2. Appellant is aggrjeved by and dissatisfied with the judg- ment and order. dated 28.11.2005 passed by the High Court of Madhya Pradesh at Gwalior in Misc. Appeal No.5/2000 whereby and whereunder the appeals preferred by the respondent herein · D against an award dat~d 6.10 ..1'999 passed by the Additional Motor Accident Claims Tribunal, Vidisha, in Claim Case Nos.57 of 1998 and 52 of 1998 were· allowed opining that the respon- dent-insurance company was not lia~le to indemnify the insured.·

3Copy pinpoint3. Bereft of all unnecessary details, the fact of the matter is that on 27.1.1996 the deceased Rajendra Singh and Balaram along with others were travelling by a truck bearing registration No.MP-06/E/0129 with the.ir buffalos on 27.1.1996 from Agra to Vidisha. It met with an accident having been hit by a tractor trolly bearing registration No.MP-6/J/7506. Rajendra Singh died on the spot whereas Balaram was seriously injured in the said accident. He was admitted in a hospital at Gwalior where he succumbed to his injuries.

4Copy pinpoint4. A First Information Report was also lodged with regard to the said incident. G

5Copy pinpoint5. Having been served with a notice in the proceedings claiming compensation by the dependents of the said deceased in terms of Section 166 of the Motor Vehicles Act, 1988, the respondent, in his written statement, inter alia, raised a conten- H tion that the driver of the tractor, the respondent No.6, did not

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CO. LTD. & ORS [S.B. SINHA, J.]

have any valid and effective driving 1.icence to drive the said A vehicle on the said date of accident.

6Copy pinpoint6. The learned Tribunal, having regard to the pleadings of the parties, inter alia, framed the following issue :

Issues Findings B .. 1 to 5 .... ...

6. Whether the terms of the insur- No ance policy has been violated.in this case? c

7Copy pinpoint7. By reason of an award dated 6.10.1999, the learned Tribunal held that the driver Ram Prakash was having valid li- cence only for the period 11.i 1990 and t0.2.1993 and again from 7.2.1996 to 7.2.1999. D Indisputably, therefore, the driver Ram Prakash did not hold any licence during the period 11.2.19S3 to 6.2.1996. The learned Tribunal held: "Therefore, in United India Insurance Co. v. Sherali [1999 (1) E MPW N. 90], it was laid down that if the driver was having driving license but the same was not got renewed at the time of the accident, then insurance company can not be exonerated from its liability. In this case as well, non-applicant No.1 was having license and for this reason driving of the tractor in violation of the. terms of the insurance policy is not ·F ~ proved and non-applicant no.2 cannot escape from i~s liability. Therefore, issue No.6 is being decided negatively."

8Copy pinpoint8. In the appe.als preferred by the respondents herein in terms of Section 173 of the Motor Vehicles Act, the High Court, G on the other hand, held : ·

"Learned Counsel for the ·appellant drew my attention to the decision of the Ap~x Court in the case of New India Assurance Co. LtrJ. vs. Mandar Madhav Tambe and others reported in 1996 ACJ 253. In which it has been held that H •

I 730 SUPREME COLJ,~T REPORTS [2008] 11 S.C.R. r "i~

A the insurance company would be liable only if the vehicle ,. was being driven by a person holding a valid driving licence or a permanent driving licence other than learners licence and if the driver was holding no licence on the date of accident than the insurance company is not liable to 8 indemnify the insured. In the case of Manoj Vs. Samundar Singh and others reported in 2005 ACJ 520, the Division +- Bench of this Court has held that if the driver of the offending vehicle has no licence on the date of accident then the insurance company is not liable to indemnify the insured c as the vehicle was being drivern in contravention of the terms.and conditions of the insurance policy. In the case of National Insurance Co. Ltd. Vs. Swaran Singh and others, reported in Al R 2004 SC 1531, the Apex Court has held that the owner of the motor 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, where 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. Th~ Apex: Court further held that the breach of policy.·· condition e .. g .. disqualification of driver or invalid driving Jicenc:e of the driver, ~s conta.fned in sub~section · 2(a)(ii) of Section 149, have to be proved to have .been F· committed by the insured for avoiding the liability by the insurer. The insurer has to prove that the insured was guilty + of negligence and failed to exercise reasonable care in the matter .of fulfilling the condition of the policy regarding use of vehicles by duly licensed driver or one who was G disqualified to driver at relevant time.

9Copy pinpoint9. In the present case it is duly proved that on the date of accident i.e. 27.1.1996 the driver was not having valid ,.. driving licence for the period from 11.2.1993 to 6.2.1996 and his licence had expired and tractor driver wr.s not H

RAM BA3U TIWARI v. UNITED ;;;JIA~l INSURANCE T' .j •

CO. LTD. & ORS [S.B. Sl~~rlA, J.] " -,., having valid driving licence insurer cannot be absolved of its liability to indemnify the insured. The learned Claims Tribunal committed an error in holding that the insurance company is liable to indemnify the insured. In view of the law laid down by the Apex Court in the case of Swaran Singh (supra), I hold that the amount of compensation shall be paid by the appellant/insurance company and the -~ same shall be recovered from the driver and the owner of the vehicle. The Claims Tribunal has erred in not giving the direction that insurer can recover the amount of compensation paid to the claimants from the insured." c

8. Mr. Anish Kumar Gupta, learned counsel appearing on behalf of the appellant, would submit that although the driver of the tractor did not hold any licence for tr.e period 11.2.1993 to 6.2.1996, but having regard to the provisions contained in Sec- tion 15 of the Motor Vehicles Act, 1988 and in particular the D

.. second proviso appended to sub-section (4) thereof, it must be held that the renewal of licence would take ef'ect from a retro- spective date. It was furthermore contended that in any view of the matter in view of the decision of this Court in National Insur- ance Co. Ltd. v. Swaran Singh & Ors. [(2004) 3 SCC 297]. the E respondent cannot escape its liability so far as a third party is concerned in view of Sections 147 and 149 of the Act.

9. Mr. Vishnu Mehra. learned counsel appearing on behalf of the respondent, on the other hand, would support the im- pugried judgment. F -> 10. Section 147 of the Act mandates obtaining of compul- sory 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 G of third party risks. Sub-section (2) of Section 149 however postulates that insurance company would have a right lo de- fend the action, inter alia. on a ground that there has been a ~

breech of specified condition of the policy as specified in vari- ous sub-clauses; clau~e (ii) thereof being as under : H

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A "(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" ' ~

11Copy pinpoint11. In view of the aforementioned provisions, in the event a 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 . a valid driving licence would be a yalid one. '

c The question as to what would constitute a breach of con- ditions 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 : ' D "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 of the 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, G ·,. the-insurer can get away from the 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. · H

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CO. LTD. & ORS [S.S. SINHA, J.]

42. We may also take note of the fact that whereas in A 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 B ...--+ to insurance as regards third-party risks .

43. A provision of a statute which is penal in nature vis-a- vis 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 c construed differently.

44. The words "effective licence" used in Section 3, therefore, in our opinion, cannot be 'imported for sub- section (2) of Section 149 of the Motor Vehicles Act. We D must also notice that the words "duly licensed" used in sub-section (2) of Section 149 are used in the past tense." '>'

12Copy pinpoint12. 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 ef- E fectof various fact situations therein separately. While consid- ering 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 F ·-t person having a driving licence. The owner of a motor 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, G 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 H

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~ A 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 B 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.)"

13Copy pinpoint13. The question as to whether the owner of a vehicle had taken care to inform himself as to whether the driver entrusted c 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, D he failed and neglected to renew his licence. His licence was renewed only on and from 7 .2.1996.

14Copy pinpoint14. What would be the effect of not having a licence for )t_· I such a long period is the question. .,.. t

15Copy pinpoint15. Section 15 of the Motor Vehicles Act provides for re- newal 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 F 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

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CO. LTD. & ORS [S.B. SINHA, J.]

certificate in the same form and in the same manner as is A 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."

16Copy pinpoint16. Sub-section (4) of Section 15 of the Act provides that 8 ,;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 c 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 D 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."

18Copy pinpoint18. It is beyond any doubt or dispute that only in the event an application for renewal of licence is filed within a period 30 E days from the date of expiry thereof, the same would be re- n~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 F 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, there- fore, evident that as, on renewal of the licence on such terms, the driver of the vehicle cannot be said to be holding a valid G ~ 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.. H

.... 736 SUPREME COURT REPORTS [2008] 11 S.C.R. l 'i- A section (3) of Section 9. It does not say that the renewal would be automatic. It is, therefore, a case where a breach.of the con- tract 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 : B "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

c as noticed hereinbefore, was holder of a licence to drive 1--

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 D It was furthermore held : ~ ,._. "14. T~is Court in Swarf!n Singh 4 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 E 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 : · F "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

19Copy pinpoint19. 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 H

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CO. LTD. & ORS [S.B. SINHA, J.]

appear that the licence is renewed in terms of the said Act A 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 B 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." c

20Copy pinpoint20. For the reasons aforementioned, there is no 1nfirmity in the impugned judgment. The appeals are, therefore, dis- missed. However, in the facts and circumstances of the case, there shall be no order as to costs. S.K.S. Appeals dismissed .