1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY, BENCH AT AURANGABAD FIRST APPEAL NO. 2744 OF 2009 New India Assurance Company Ltd. Branch Ahmednagar Through its Divisional Manager, Adalat Road, Aurangabad. .. APPELLANT VERSUS 1 Karbhari s/o Hiralal Shinde age 42 years, occ. collie and agri. r/o Bagadi, Tq. Gangapur Dist. Aurangabad. 2 Anand s/o Lahanu Pansare age major, occ. business r/o Sangamner, Tq. Sngamner Dist. Ahmednagar. .. RESPONDENTS Shri. S. G. Chapalgaonkar, Advocate for the appellant. Shri R.A. Tambe, Advocate for respondent no. 1. Shri N.V. Gaware, Advocate for respondent no. 2. ===== CORAM : P. R. BORKAR, J. RESERVED ON : 24 th JUNE, 2010 PRONOUNCED ON : 30 th JUNE, 2010 ORAL JUDGMENT : 1 This is an appeal preferred by the insurance company being 2 aggrieved by the judgment and award passed by the Member, Motor Accident Claim Tribunal, Sangamner, Dist. Ahmednagar in MACP no. 69/2004 decided on 17-6-2009 whereby the present appellant and respondent no. 2 are directed to pay compensation of Rs. 4,71, 658/- together with interest at the rate of 7.5% from the date of petition till its realisation. 2 Briefly stated, facts giving rise to this appeal may be stated as below :- . On 26-2-2004 at about 8.30 pm, respondent o. 1 Karbhari was proceeding from Sangamner Sugar factory towards Sangamner bus stand in auto rickshaw bearing no. MCN 7081 owned by respondent no. 2 and insured with respondent no. 1 – appellant. When the auto rickshaw was passing near Sahyadri Garage on Pune – Nasik highway, it gave dash to one bullock cart and the petitioner who was sitting in the auto rickshaw on left (cleaner) side sustained serious injuries which ultimately resulted in amputation of his left leg. The rickshaw driver was prosecuted by police. Respondent no. 1 – claimant filed claim petition for getting compensation on Rs.5,00,000/-. After hearing both the sides, the tribunal awarded compensation as stated above. 3 3 This appeal is preferred by the insurance company on the ground that there was breach of policy in as much as the rickshaw driver was not holding valid driving licence and as such, the insurance company is not liable to pay compensation. It is also argued that no deduction was considered while calculating compensation for loss of earnings. So far as the first part is concerned, insurance company produced insurance policy at exh. 59 and the condition mentioned regarding persons who are entitled to drive is to the effect that “ Any person including the insured provided that the person driving holds an effective and valid driving license to drive the category of vehicle insured hereunder, at the time of accident and is not disqualified from holding or obtaining such a license.” . Insurance company examined Sachin Asmar at exh. 54 who was working as a Jr. Clerk at Shrirampur Sub-regional Transport Office from July 2008. He stated that he had brought record regarding driving licence of Sudam Fatangare who was admittedly driving the auto rickshaw in question at the time of accident. It is stated that on 22-1-1996 driving licence was issued to Sudam and its period was upto 21-1-1999. It was driving licence for transport vehicle. However, after 21-1-1999, said licence was not registered 4 and he produced record to that effect at exh. 57. He further stated that Sudam Fatangare was given non-transport licence on 13-12-1995 and it was valid upto 12-12-2020. In cross examination, witness stated that rickshaw driver Sudam Fatangare had licence for driving rickshaw. He denied that on 26-2-2004 driver Sudam had licence to carry passengers in auto rickshaw. The tribunal in paragraph no. 15 of the judgment has observed that the clerk from RTO office has admitted that auto rickshaw driver Sudam had transport licence but it was not renewed and during cross examination he admitted that Sudam had licence to drive auto rickshaw and he was not disqualified. It is also observed that rickshaw driver had considerable experience to drive auto rickshaw as he was holding valid licence till 21-1-1999. He further stated that non-renewal is technical breach and relying on the case of National Insurance Co. Ltd. vs. Swaran Singh and others reported in AIR 2004 Supreme Court 1531 the tribunal has held that the insurance company is not exonerated. We will find discussion also in paragraph no. 8 onwards of the trial court judgment. It is argued before me that the tribunal has no properly appreciated law on the issue involved. Learned advocates for respondent nos. 1 and 2 relied upon the case of National Insurance Co. Ltd. Vs. Swaran Singh (cited supra) particularly paragraph nos. 84 and 85 and clauses (iii) and (vi) of paragraph no. 105 which are as follows : 5 84 Section 3 of the Act casts an obligation on a driver to hold an effective driving licence for the type of vehicle which he intends to drive. Section 10 of the Act enables Central Government to prescribe forms of driving licences for various categories of vehicles mentioned in sub-section (2) of said section. The various types of vehicles described for which a driver may obtain a lience 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, 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 10. They are ‘goods carriage’, ‘heavy-goods vehicle’, ‘light motor- vehicle’, ‘invalid carriage’, light motor-vehicle’, ‘maxi-cab’, ‘medium goods vehicle’, ‘medium passenger motor-vehicle’, ‘motor-cab’, ‘motorcycle’, ‘omnibus’, ‘private service vehicle’, ‘semi-trailer’, ‘tourist vehicle’, ‘tractor’, ‘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. A person possessing a driving licence for ‘motorcycle without gear’, 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-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 contributory cause of accident. If on facts, it is found that accident was caused solely because of some other unforseen or intervening causes like mechanical failures and similar other causes having no nexus with driver not possessing requisite type of licence, the insurer will not be allowed to avoid its liability merely on technical breach of conditions concerning driving licence. 6 85 We have construed and determined the scope of sub- clause (ii) of sub-section 2 of Section149 of the Act. Minor breaches of licence conditions, such a want of medical fitness certificate, requirement about age of the driver and the like not found to have been the direct cause of the accident, would be treated as minor breaches of inconsequential deviation in the matter of use of vehicles. Such minor and inconsequential deviations with regard to licensing conditions would not constitute sufficient ground to deny the benefit of coverage of insurance to the third parties. 105 The summary of our findings to the various issues as raised in these petitions are as follows : (iii) The breach of policy condition e.g. disqualification of driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(ii) of Section 149, have to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards insured, 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 not disqualified to drive at the relevant time. (vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches on the condition of driving licence is/ are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply “the rule of main purpose” and the concept of “fundamental breach” to 7 allow defences available to the insured under Section 149(2) of the Act. . Clause vii of paragrph no. 105 is also relevant and it is as follows :- (viii) The question as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver, ( a fake one or otherwise), does not fulfil th requirements of law or not will have to be determined in each case. . So it is clear that the owner has to take reasonable care to find out as to whether the driving licence produced by the driver ( a fake or otherwise) does fulfil the requirements of law or not. In this case, respondent no. 2 rickshaw owner is not examined. There is nothing on record to show that the rickshaw driver Sudam has shown any fake or false driving licence or represented that he had licence to drive transport vehicle beyond year 1999. It may be noted that the evidence of clerk of RTO office particularly exh. 57 makes it clear that licence to drive transport vehicle was only upto 21-1-1999 and it was not valid in the year 2004 when the accident had taken place. 4 Here it is necessary to refer to some of the provisions of the Motor Vehicles Act. Section 2(47) of the Act defines transport vehicle as 8 . “transport vehicle” means a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle;” . Section 2(35) defines ‘public service vehicle” as . “public service vehicle” means any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a maxi-cab, a motor-cab, contract carriage, and stage carriage;” . It is clear that the auto rickshaw in present case was used for carriage of passengers for hire and reward and therefore, it would be a public service vehicle. Section 3 speaks about necessity of driving licence and the Motor Vehicles Act 1988 speaks about various types of driving licences and also various types of motor vehicles. Section 14(2) of the Motor Vehicles Act 1988 is as follows : 14 Currency of licences to drive motor vehicles - (2) A driving licence issued or renewed under this Act shall - . a) in the case of a licence to drive a transport vehicle, be effective for a period of three years . (Provided that in the case of licence to drive a transport vehicle crrying goods of dangerous or hazardous nature be effective for a period of one year and renewal thereof shall be subject to the condition that the drier undergoes one day refresher course of the prescribed syllabus; and) 9 . b) in the case of any other licence - . i) if the person obtaining the lience, either originally or on renewal thereof, has not attained the age of [fifty] years on the date of issue or, as the case may be, renewal thereof,- . A be effective for a period of twenty years from the date of such issue or renewal; or . B until the date on which such person attains the age of [fifty] years . whichever is earlier; . [(ii) if the person referred to in sub-clause (i) has attained the age of fifty years on the date of issue or as the case may be, renewal thereof, be effective, on payment of such fee as may be prescribed, for a period of five years from the date of such issue or renewal.] . Provided that every driving licence shall; notwithstanding its expiry under this sub-section, continue to be effective for a period of thirty days from such expiry. 5 In this case, the accident had not occurred within 30 days after expiry of licence but it had occurred on 26-2-2009 whereas as per exh. 57 the record of the RTO, the licence for driving transport vehicle has expired on 21-1-1999. It is worth noting that driving licence for transport vehicle is given at a time for three years and then renewed for further period of three years at a time with certain object in the mind of Legislature. So, non-renewal of 10 licence is not merely technical insignificant defect. It has bearing on the duty cast by the insurance policy so also by the Motor Vehicles Act on the owner of the vehicle. It may be noted that as per section 180 of the Motor Vehicles Act, it is an offence for the owner of the vehicle to allow or permit any person who does not satisfy the provisions of section 3 or section 4 of the Act to drive the vehicle. As per section 3, no person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorising him to drive the vehicle and no person so shall drive the transport vehicle (other than motor-cab or motorcycle) hired for his own under the scheme made under section 75(2) or unless his driving licence specifically entitles him so to do. So in my considered opinion, the tribunal has committed error and has wrongly held that there was no breach of policy and the insurance company is liable to pay compensation. 6 Here I may rely on the case of Ram Babu Tiwari vs. United India Insurance Co. Ltd. and others reported in 2008 AIR SCW 6512 wherein the driver of offending tractor did not have valid driving licence for period from 11-2-1993 to 6-2-1996. On the date of accident i.e. on 27-1-1996, his licence had already expired. His licence was renewed only on and from 7-2-1996 and not within 30 days from the date of expiry thereof as provided by proviso 11 to section 15(1) of the Act. It was held that renewal of licence would not take effect from retrospective date but from the date of its renewal. It was held that breach of contract of insurance is thus established and the insurer is not liable to indemnity the insured. So the ratio of this case clearly applies to the case in hand. In that case, their Lordships have referred to the case of National Insurance Co. Ltd. Vs. Swaran Singh and others (cited supra) . In paragraph no. 13 of the judgment it was observed that the question as to whether the owner of the 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 of fact. In the facts before the court, it stands admitted that on the date of accident driver did not hold valid lience and his lience was renewed only after accident. In paragraph no. 15 of the judgment question was raised as to whether there would be the effect of non-renewal of licence for long time. Reliance was placed on the ratio laid down in National Insurance Company Ltd. Vs. KusumRai and others reported in 2006(4) SCC 250. 7 Second case on which reliance is placed by the advocate of the appellant is New India Assurance Co. Ltd. Vs. Suresh Chandra Aggarwal reported in AIR 2009 Supreme Court 2987. In that case, driving licence of the 12 deceased driver had expired 4 months prior to the date of the accident. Claimant had not claimed that driver had applied for renewal of licence within 30 days. It was held that since deceased had no valid effective driving licence on the date of the accident, insurer is not liable to indemnity the claimant for loss. In paragraph no. 17 of the judgment it is observed that the claimant / owner not only committed breach of the terms of policy but also violated section 5 of the Act by entrusting the vehicle to a person who did not hold valid licence on the date of the accident. In this case, it was an auto rickshaw which was used for plying passengers on hire and reward. It was a transport vehicle. The driver did not hold valid and effective driving licence and therefore, there is clear breach of policy. I may also rely on the case of National Insurance Co. Ltd. Vs. Vidhyadhar Mahariwala and others reported in AIR 2009 Supreme Court 208 in which it is laid down that when driving licence of driver of offending vehicle was not in force on the date of the accident, insurance company is exonerated from its liability. In that case again reference was also made to the various cases including the cae of Swaran Singh (cited supra). That was a case having almost similar facts as can be seen from paragraph no. 4 of the case reported. So in the facts and circumstances of the case, in my opinion, this is a case where there is breach of policy and the tribunal committed error in holding that the insurance 13 company is also liable. 8 So far as second part of the argument referring deduction is concerned, reliance was placed on New India Assurance Co. Ltd. Vs. Charlie reported in 2005 (10) SCC 720. However, in my opinion there is no necessary foundation led in the evidence to invoke the ratio of the case. So the ruling is not applicable to the case in hand. 9 In these circumstances, appeal is allowed. Judgment and award of the Tribunal is hereby set aside to the extent of appellant – insurance company only but confirmed as between the respondents. Original claim petition stands dismissed against the appellant. Appellant is entitled to recover the amount, if already paid to the claimant. ( P. R. BORKAR, J.) dyb/office/fa2774.09.odt