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2007 DIGILAW 2569 (ALL)

NEW INDIA ASSURANCE CO. LTD v. JAGDISH SINGH

2007-10-09

PANKAJ MITHAL

body2007
JUDGMENT Hon’ble Pankaj Mithal, J.—This First Appeal From Order under Section 173 of Motor Vehicles Act, 1988 (hereinafter referred to as an Act) by the insurance company arises out of the judgment, order and award of the Tribunal dated 14.1.2003 passed in MACP No. 33/70/93 (Jagdish Singh and another v. Sushil Kumar Shukla and another). 2. A school going six and half year old boy of class II was crushed to death by the speeding tempo No. UP-76-9098. The tempo which was owned by Sushil Kumar Shukla was insured with New India Insurance Company Limited. It was being driven by the driver Raj Kumar @ Raju. On the claim petition being preferred under Section 166 of the Act by the parents of the deceased boy, the Tribunal awarded a sum of Rs.1,00,000/- with 9% interest from the date of presentation of the petition till its payment and the insurance company was held liable to pay the same. 3. The only point for determination which has been raised by the learned counsel for the appellant New India Insurance Company Limited is that at the time of the accident the driver of the tempo was not having a valid licence as his licence had expired on 24.1.1992 and as such since the vehicle was being driven in violation of the terms and conditions of the insurance policy the insurance company is not liable for the payment of compensation. 4. It is not in dispute that the accident took place on 5.2.1993. The driver of the vehicle was having a licence to drive tempo but admittedly the validity of the said licence expired on 24.1.1992. The driver had not applied for the renewal of the licence. Therefore, the licence had lapsed and as such the driver was not possessed with any licence on the date of the accident. However, the Tribunal in spite of recording a finding that the driver was not having a valid licence on the date of accident held that as he had been issued the driving licence, he was a person competent to drive the vehicle and as such the insurance company alone is liable to pay the compensation. 5. The scheme of the Act is sufficiently clear. 5. The scheme of the Act is sufficiently clear. Section 3 of the Act provide that no person shall drive a motor vehicle in public place unless he holds an “effective driving licence” issued to him authorising him to drive the vehicle. Section 5 of the Act mandates that no owner or person in-charge of the motor vehicle shall cause or permit any person who does not satisfy the conditions of Section 3 of the Act to drive the vehicle. In short, it puts an obligation upon the owner of the motor vehicle to ensure that no person other than a person having a valid driving licence drives the vehicle. Section 15 of the Act provides for the renewal of the driving licence by the licensing authority on an application in this regard. A plain reading of the above provision demonstrates that on application of renewal of a driving licence should normally be made within a period of 30 days of the expiry of the licence. The licensing authority has no power to suo motu renew the driving licence except on an application for renewal. Therefore, application for renewal of driving licence is sine qua non for its renewal otherwise the licence shall lapse. However, where renewal is applied after 30 days of the expiry of licence and the application is granted, the renewal shall have effect from the date of renewal and not from any earlier date. Admittedly in the present case the licence granted to the driver was valid only up to 24.1.1992. No application for its renewal was made within a period of 30 days prescribed and not even till the date of accident i.e. 5.2.1993. Thus, the licence of the driver had expired and had lapsed. He was therefore, not having any licence to drive the motor vehicle on the date of the accident. 6. In the case of United India Insurance Company Ltd. v. Lehru and others, JT 2003 (2) SC 595, it was observed that where the owner has satisfied himself that the driver has a licence and is driving competently there would be no breach of Section 149(2)(a)(ii) of the Act. 6. In the case of United India Insurance Company Ltd. v. Lehru and others, JT 2003 (2) SC 595, it was observed that where the owner has satisfied himself that the driver has a licence and is driving competently there would be no breach of Section 149(2)(a)(ii) of the Act. Once the owner has checked that the driver possesses a valid driving licence which on the face of it is genuine, the owner is not expect to explore and find out whether the licence produced by the driver had been issued by the competent authority or not. Since in that case the owner had not only examined the driving licence produced by the driver but also took driving test of the driver and has come to the conclusion that he was competent to drive the vehicle, it was held that there was no breach of Section 149(2) (a) (ii) of the Act and the insurance company would not be absolved of its liability to pay the compensation. The above principle laid down had been followed and reiterated by the Supreme Court in JT 2007(10) SC 122, Lal Chandra v. Oriental Insurance Company Limited. 7. The legal position that emerges from the above case law is that it is the duty of the owner of the vehicle to prima facie satisfy himself that the driver to whom the vehicle has been entrusted is possessed of a valid licence and is a person competent to drive. If he has taken care of satisfying himself about the above then the insurer i.e. insurance company with whom the vehicle is insured, cannot avoid its liability to pay compensation on the ground of breach of the conditions of the policy. 8. In the instant case, the owner of the vehicle has not pleaded and adduced any evidence to the effect that he had examined the driving licence of the driver. However, even if it is assumed that the licence was examined and a driving licence had been validly issued and he was competent to drive the motor vehicle, it cannot be said that the owner of the vehicle has exercised reasonable care in entrusting the vehicle to a competent person who was legally authorised to drive the vehicle inasmuch had he examined the licence, it would have been clear to him that it was valid only up to 5.2.1993. Once this fact had come to the notice of the owner of the vehicle it was his incumbent duty to get the licence of the driver renewed in accordance with law within time provided. The absence on part of the driver in applying for the renewal of the licence and also on part of the owner of the vehicle to pursue the driver to apply and to get the licence renewed demonstrate that both of them were negligent in discharging their duties and taking reasonable expected of them under the Act. In the circumstances the owner was guilty of allowing the driver to drive the motor vehicle in contravention of Section 5 of the Act. This contravention on his part has undoubtedly resulted in the breach of the terms and conditions of the insurance policy. 9. Sri Shailendra Kshitij, learned counsel appearing for the respondent No. 3, the owner of the vehicle contended on the basis of the decision of the Supreme Court reported in JT 2004 (1) SC 109, National Insurance Company Ltd. v. Swaran Singh and others, that the insurance company cannot be allowed to avoid its liability towards the insured unless the said breach is so fundamental as to have contributed to cause the accident. In the case of Swaran Singh (supra) the Supreme Court while considering the extent of liability of the insurance company and the defences available to it held that compulsory insurance against the third party risks is a social welfare legislation. Therefore, the insurance company is entitled to raise defence only in terms of Section 149 (2)(a)(ii) to avoid its liability. The insurance company is not only supposed to prove that there is breach of the policy but that the insured (owner of the vehicle) is also guilty of negligence and has failed to exercise reasonable care in the matter of fulfilling the conditions of policy regarding use of the vehicle by duly licensed driver or one who is not disqualified to drive at the relevant time. Thus, insurance company can only avoid its liability if it is able to prove breach of the conditions as well as negligence or failure on part of the owner to exercise reasonable care to verify the competence of the person under law to drive the vehicle before entrusting the motor vehicle into his hands. Thus, insurance company can only avoid its liability if it is able to prove breach of the conditions as well as negligence or failure on part of the owner to exercise reasonable care to verify the competence of the person under law to drive the vehicle before entrusting the motor vehicle into his hands. In the instant cases, the owner had not taken reasonable care in this regard as pointed out earlier. The driver who was entrusted with the vehicle had ceased to be a person competent to drive under the Act. 10. Sri Satish Chaturvedi, learned counsel for the appellant Oriental Insurance Company has placed reliance upon (2004) 3 SCC 343 , Malla Prakasarao v. Malla Janaki and others, a three Judges decision of the Supreme Court wherein a similar controversy had come up before the Supreme Court and it was held that as the licence of the driver of the vehicle had expired and driver had not applied for renewal of licence within 30 days of its expiry the driver of the vehicle had no driving licence on the date the accident took place. Therefore, according to the terms of the contract the insurance company had no liability to pay compensation. In another case reported in JT 2006 (4) SC 9, National Insurance Co. Ltd. v. Smt. Kusum Rai and others, the driver was having a licence to drive a private light motor vehicle but he was driving a taxi without having an appropriate commercial licence. Therefore, the court held that as he was not possessed of the licence to drive a commercial vehicle, there was breach of conditions of the contract. Accordingly, the insurance company was held entitled to raise the said plea and was held not liable to pay the compensation particularly in absence of the pleadings and evidence of the owner that he had verified about the driver of the vehicle having a valid licence or not. In another Division Bench of the Supreme Court in 2007 (2) TAC 393 (SC), Iswar Chandra and others v. Oriental Insurance Co. Ltd. and others a similar controversy had come up before the Supreme Court for consideration. In this case also the licence of the driver had expired and thereafter the accident had taken place. Till the accident no application for the renewal of the licence was moved. Ltd. and others a similar controversy had come up before the Supreme Court for consideration. In this case also the licence of the driver had expired and thereafter the accident had taken place. Till the accident no application for the renewal of the licence was moved. It was held that the driver had no valid licence on the date of the accident and therefore, the Insurance Company would not be liable to pay the compensation even if driving licence had been renewed subsequently. The above three decisions of the Apex Court squarely covers the field. 11. In view of the above discussion it is apparent on record that the licence of the driver had expired and he was not possessed of any valid driving licence on the date of the accident. He had not even applied for its renewal either within 30 days of the expiry of the licence or till the date of the accident. The owner of the vehicle who was under a legal obligation to ensure that the vehicle was not driven by any unlicensed person had also not taken care to ensure that the driver applies and get the licence renewed. The purpose for issuing driving licence for a fixed period and to provide for its renewal is to enable the licensing authority to verify the continued competence of the persons to drive a motor vehicle. A person may be rendered unfit physically or mentally with the passage of time or otherwise to drive even though he was competent to do so earlier. Thus, the non-renewal of his driving licence coupled with the fact that he had not even applied for its renewal gives rise to a legitimate presumption that he had become incompetent to drive and was not a person competent to drive the motor vehicle at the time of accident. Therefore, on the facts there was a breach of the conditions of the contract of the insurance and accordingly the insurance company i.e. the appellant Oriental Insurance Company was not liable for payment of any compensation. 12. In view of the above, the appeal succeeds. The judgment, order and award passed by the Motor Accident Claims Tribunal dated 14.1.2003 passed in MACP No. 33/70/93 (Jagdish Singh and another v. Sushil Kumar Shukla and another) is set aside to the extent it fixes the liability to pay the compensation awarded upon the appellant insurance company. 12. In view of the above, the appeal succeeds. The judgment, order and award passed by the Motor Accident Claims Tribunal dated 14.1.2003 passed in MACP No. 33/70/93 (Jagdish Singh and another v. Sushil Kumar Shukla and another) is set aside to the extent it fixes the liability to pay the compensation awarded upon the appellant insurance company. The respondent No. 3 the owner of the vehicle is held liable to satisfy the award. 13. The appeal is allowed as above with no orders as to costs. ————