M/s. National Insurance Company Limited, Gobichettipalayam vs Thulasi and 2 others

Srinivasan, J.—When the petition for stay came up for orders, counsel on both sides agreed to argue the main appeal itself as the only

question raised is whether the Insurance Company, the appellant herein is not liable to pay compensation to the claimant in view of the fact that the

driver of the vehicle involved in the accident had no licence to drive the same. The first respondent herein is the claimant. The second respondent is

the driver and the third respondent is the owner of the vehicle which is a scooter. The claimant as injured on 3-7-1986 when the Scooter driven by

the second respondent dashed against him. He claimed a compensation of Rupees one lakh. The appellant who was the third respondent before

the Tribunal pleaded inter alia that the driver of the vehicle was not having a valid licence to drive the vehicle. The policy of insurance was marked

by consent as Ex.D-1, The relevant clause reads:-

Persons or classes of persons entitled to drive any person including insured PROVIDED that a person driving holds an effective driving licence at

the time of the accident and is not disqualified from holding or obtaining such licence provided also that the person holding an effective learner''s

licence may also drive the vehicle and such a person satisfied the requirement of rule 3 of the Central Motor Vehicle Rules 1989.

A Xerox copy of the second respondent''s driving licence is marked by consent as Ex.B-2. It was issued on 10-7-1986 by the Assistant Licencing

Authority, Gobichettipalayam for the period 8-7-1986 to 7-7-1991. Obviously, the application for licence was made five days after the accident

and obtained on 10-7-1986. The purpose of the same in self-evident. The claimant has produced a certified copy of the Inspection Report given

by the Motor Vehicles Inspector, Gobichettipalayam under Rule 418A of the Tamil Nadu Motor Vehicles Rules. The original report is found

among the records received form the Judicial Magistrate Sathyamangalam, the criminal case C.C. No. 335 of 1986 against the driver along with

Ex.X-1 (wound certificate). Col.7 of the report shows that no driving licence was produced before the Inspector. That report is dated 7-7-1986.

The application for driving licence is made only on the; next day (8-7-1986).

In spite of the above materials on record, the Tribunal brushed aside the contention of the Insurance Company by observing that the driver of

the vehicle had a licence marked as Ex.B-2 and the vehicle is insured under the policy marked as Ex.B-1 and therefore the company is liable in

view of nature of injuries suffered by the claimant. The owner of the vehicle and the insurer are made liable jointly and severally of a sum of

Rs.50,000/- with interest at 12% per annum from the date of the original petition. There can be no doubt that the Tribunal has not noticed that the

driving licence is only for a subsequent period and there is no licence for any earlier period. The contention of the appellant that the driver of the

vehicle had no licence at the time of accident is well founded.

Learned counsel for the claimant contends that the burden is heavily on the insurer to prove that the exclusion clause is applicable and in this

case the insurer not having examined any witness has failed to discharge the same. It is also submitted by him that when the claimant gave evidence

no question was put to him in the cross examination. There is no merit in this contention. The two documents produced by the insurer were marked

by consent and there was no necessity to examine any witness as the records speak for themselves. How can the insurer examine any person who

can assert from his personal knowledge that the driver of the vehicle had no driving licence at the relevant time? We should not forget that both the

owner of the vehicle and the driver will in their own interest do their best to defeat the case of the insurer. The best evidence that can be added by

the insurer is the relevant record only and it is placed before the Court. Once, that is done the burden shifts on to the person who wants to prove

the positive, viz., that the driver had a licence. That could have been easily established by the claimant by summoning the records from the office of

the licencing authority. On the facts and circumstances of the case, we have no hesitation to hold that the second respondent had no driving licence

at all prior to 8-7-1986 and the exclusion clause in the policy of insurance will come into play.

It is next contended by learned counsel for the claimant that the insurer must also prove that the driver of the vehicle was disqualified in law from

holding or obtaining a licence. Reliance is also placed on some rulings of this court and the Allahabad High Court. Before considering the rulings it

is necessary to refer to the provision in the Motor Vehicles Act. S. 96(2) of the - Motor Vehicles Act, 1939 sets out the defence which can be

raised by the insurer in a proceeding for compensation. Similar provision is found in S. 149 of the Motor Vehicles Act, 1988, Under Cl. (b) (ii) of

S. 96(2), the insurer can plead that there has been breach of a condition of the policy excluding driving by a named person or persons or by any

person who has been disqualified for holding or obtaining a driving licence during the period of disqualification. There are two limbs to the Section

and the disjunctive ''or'' is used. The first part deals with a case where the driver is not duly licensed. If a person had no licence at all prior to and at

the time of the accident, he will be covered by the first part. If the first part applies to a case, the second part will not apply. The second part will

necessarily apply only to cases in which the driver had a licence some time or other and at the time of the accident it is not subsisting. The latter

part of the section cannot be interpreted as meaning that even it the driver had no licence at any time, he must be shown to be disqualified to hold

or obtain a licence for the purpose of excluding the liability of the insurer.

Learned counsel draws support from the observations in Ishwar Devi v. Reoti Raman (AIR 1978 All 307) and New India Assurance Co. Ltd.

v. C.H. Shankar and others (1986 (1) A.C.J. 82 = 98 L.W.431 (D.B.)). In the first case, the motor-cyclist involved in the accident held a

learner''s licence just prior to the accident and again obtained a learner''s licence after the accident and thereafter obtained a permanent licence. But

at the time of the accident there was no licence. The Bench construing the clauses in the policy reading ""holds a licence or has held and is not

disqualified from holding or obtaining such a licence"", held that the driver of the vehicle having held a licence and also obtained a licence later, will

be governed by the latter part of the clause and, therefore if he is not disqualified from holding or obtaining a licence, the insurer cannot escape his

liability. That judgement will have no bearing in the present case for the reason that the driver of the vehicle in this case never had a licence. In the

later case, Division Bench of this court held that the burden is on the insurance company to prove that the driver was disqualified from holding or

obtaining a licence or never had a licence at all. On the facts, the Court found that R.W.3, the owner of the vehicle, gave evidence that the driver

was under his employment for over 2 years prior to the accident and during that time he had a driving licence. The driver had left his service

immediately after the accident and could not, therefore, be contacted. There was no cross-examination of the owner on his statement that his driver

had a licence when he was in his service. The Bench observed:-

It may also be mentioned that normally one is not expected to drive for such a long period as 24 years without a licence at all, particularly a taxi in

the metropolitan city of Madras. We may also note that it is not disputed that he had been in the employment of RVV-3 as driver for 24 years. In

the circumstances, therefore we are not persuaded to hold that the insurance company had discharged its onus of proving that the driver never had

a licence. It is not the case of the insurance company that the nature of things is such that we can presume that the driver could not nave had any

licence at all.

It is obvious that the Bench drew an inference on the available facts that the driver ""would have had a licence at the time of the accident and the is

nursery had not discharged its burden by proving that the driver had no licence on he could not have had a licence. The ruling does not help the

claimant in this case.

Learned Counsel draws our attention to the decision of a Bench in National Insurance Co. Ltd. Madras Vs. A. Babu and others, ). After

referring to the case law, the Bench held that in order to escape liability, the insurer should not only prove that the driver of the vehicle was not

holding a licence at the time of the accident, but was also disqualified from holding or obtaining a licence or that he never had any licence at all. On

the facts, the Bench found that there was evidence on record to show that the driver had a learner''s licence between 24-11-1978 and 22-7-1979

and the accident took place on 12-3-1979. It was held that a person holding a learner''s licence would be a ""duly licenced"" driver within the

meaning of S. 96(2) (b) (ii) of the Motor Vehicles Act (1939). The judgement cannot be invoked by the claimant in his aid in this case.

In Dharmalinga Mudaliar v. Mohamed Ibrahim (1976) II M.LJ. 388), there was no dispute on the facts that the person who drove the bus

involved in the accident did not have a licence to drive a heavy motor vehicle and, therefore the insurer was rightly exonerated by the Tribunal.

That was upheld by this court on appeal.

In The National Insurance Company Vs. Sugantha Kunthalambal and Others, ), a Division Bench held that there can not be any dispute that if

the driver of the vehicle is not duly licenced to drive the vehicle, the insurance company can avoid its liability. After referring to the provisions of S.

96(2)(b)(ii) of the Motor Vehicles Act, 1939 the Bench said that the onus is on the insurance company which seeks to avoid its liability under the

policy on the ground that the terms of the policy had been violated. In that case, the vehicle was an auto-rickshaw. The driver of the auto-rickshaw

had a licence to drive a light motor vehicle at the time of the accident, but he did not have an endorsement on the licence authorising him to drive an

auto-rickshaw. The Police Officer who was examined as R.W.1 concluded that the auto-rickshaw will come within the definition of ''light motor

vehicle''. The insurance company did not take any steps to call upon either the owner of the auto-rickshaw or its driver to produce the driver''s

licence by invoking the provisions of S.110-C(2) of the Motor Vehicles Act. The Bench said that in the absence the actual production of the

driver''s licence before Court, it is not possible to assume that the licence which he had, did not authorise him to drive the auto rickshaw as a

private vehicle or as a public transport vehicle. On that footing the Bench confirmed the award passed by the Tribunal against the Insurance

Company also. This judgement has been referred to end relied upon by the Division Bench in C.B. Shankar''s case (1986 (1) ACJ 82 = 98

L.W.41, D.B.) already ceased.

The same Bench which decided The National Insurance Company Vs. Sugantha Kunthalambal and Others, had occasion to consider the

question once again in M/s. National Insurance Company Ltd., v. Mahadevayya & others (1981 T.L.N.J. 170) That was also a case of an auto-

rickshaw getting involved in an accident. On the evidence, the Tribunal held that the driver of the auto-rickshaw was shown to have possessed

licence for driving a light motor vehicle and the auto-rickshaw being a light motor vehicle, the driver should be held to have possessed a valid

driving licence to drive an-auto-rickshaw and, therefore negatived the contention of the insurance company that it had no liability. That conclusion

of the Tribunal was reversed by the Division Bench on an appeal by the insurance company. Referring to the earlier case, the Bench distinguished

the same by pointing out that the insurance company had called upon the driver as well as the owner of the vehicle to produce the licence by a

notice to produce, but the licence had not been produced and, therefore, the non-production of the actual licence can lead to an adverse inference

that the licence, if produced, would indicate that there was no endorsement authorising the licence to drive the auto rickshaw as a public carrier. As

there was no evidence available to show that there was licence and it contained an endorsement, the Bench upheld the contention of the insurance

company and exempted it from liability.

In E. Enjanadevi Vs. Arumugham and Another, the same Division Bench considered a case in which the vehicle involved was a tourist car. The

driver had a licence to drive a car, but there was no endorsement on the licence enabling him to drive a tourist car. The Bench upheld the

contention of the insurance company that there was no valid driving licence for the driver to drive the vehicle involved in the accident and

consequently it was not liable to pay compensation.

Having regard to the principles laid down in the above cases, we conclude that if the driver of the vehicle involved in the accident has never

held a licence at the time of the accident or previously, the insurance company is entitled to invoke the exception clause and disown Its liability. In

the present case, the facts justify the contention raised by the appellant and we uphold the same.

The appeal is allowed. The award of the Tribunal in M.C.O.P. No. 77 of 1987 is set aside in so far as it is against the appellant herein. The

award passed as against the third respondent herein will stand. There will be no order as to costs. In C.M.P. No. 8324 of 1993, this Court passed

an order at the time of admission of the appeal granting interim stay on condition that the appellant deposits the entire compensation amount after

deducting the initial deposit of Rs.25,000/- with interest and costs within four weeks from that date. The appellant says that the amount has been

deposited. In view of our finding that the appellant is not liable to pay compensation the appellant will be entitled to withdraw the entire amount

deposited by it in Court pursuant to the interim order dated 5-7-1993. The Tribunal shall issue a cheque in favour of the appellant for the said

amount.