Case: Ram Babu Tiwari Vs. United India Insurance Co. Ltd.

3. 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 their 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.4. A First Information Report was also lodged with regard to the said incident.5. 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 contention that the driver of the tractor, the respondent No.6, did not have any valid and effective driving licence to drive the said vehicle on the said date of accident.6. The learned Tribunal, having regard to the pleadings of the parties, inter alia, framed the following issue:Issues – Findings1 to 5 .... ...6. Whether the terms of the insurance policy has been violated in this case? - No7. By reason of an award dated 6.10.1999, the learned Tribunal held that the driver Ram Prakash was having valid licence only for the period 11.2.1990 and 10.2.1993 and again from 7.2.1996 to 7.2.1999. Indisputably, therefore, the driver Ram Prakash did not hold any licence during the period 11.2.1993 to 6.2.1996. The learned Tribunal heldin United India Insurance Co. v. Sherali [1999 (1) 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 proved and non-applicant no.2 cannot escape from its liability. Therefore, issue No.6 is being decided negatively.In the appeals preferred by the respondents herein in terms of Section 173 of the Motor Vehicles Act, the High Court, on the other hand, heldCounsel for the appellant drew my attention to the decision of the Apex Court in the case of New India Assurance Co. Ltd. vs. Mandar Madhav Tambe and others reported in 1996 ACJ 253. In which it has been held that 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 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 as the vehicle was being driver 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 AIR 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. The Apex Court further held that 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 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 disqualified to driver at relevant time.9. 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 was not 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."

Court's reasoning:
12. In view of the aforementioned provisions, in the event a defence on the part of the insurance company that the vehicle involved in the accident was not being driven by a driver having a valid driving licence would be a valid one.The question as to whetherthe owner of a vehicle had taken care to inform himself as to whether the driver entrusted to drive the vehicle was having a licence ornot 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.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 renewed 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 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 Section 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-section (3) of Section 9. It does not say that the renewal would be automatic. It is, therefore, a case where a breech of the contract of insurance is established.