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Judgment
S. Manikumar, J.—Brief facts leading to the appeal are as follows: On 31.12.2003, about 4.30 a.m., when the deceased along with his father and few others was proceeding from Tuticorin to Tiruchendur to workship Lord Murugan at Tiruchendur by Padayatra, a Bajaj M-80, bearing Registration No. TN04 H 5821, owned by the fourth respondent herein and insured with the appellant-Insurance Company, driven by one Anand @ Anandavel along with one Saravanan, pillion ridder, came from the opposite direction in a rash and negligent manner and knocked down the deceased, Suburaj. He sustained grievous injuries. A complaint was lodged before Tuticorin South Police Station by the father of the deceased and a case in Cr. No. 883 of 2003 u/s 279, 337 and 304(A) I.P.C., was also lodged. Immediately after the accident, he was taken to a private hospital at Muthiahpuram, where first aid treatment was given and thereafter, he was referred and treated in Government Medical College Hospital, Tuticorin. Despite the treatment, he died on the very same day. As per the claim petition, at the time of accident, the first respondent was aged about 21 years, and the marriage between the first respondent and the deceased was held 1 1/2 years back. At the time of accident, the second respondent in the appeal was 21 days baby. The father of the deceased unable to bear the sudden demise of his son, consumed poison and died on 01.01.2004. According to the claimants, the deceased was an agricultural coolie, aged about 28 years and earned Rs. 3,000/- per month. They made a claim for compensation of Rs. 10,00,000/-.
The fourth respondent-owner of the vehicle resisted the claim petition and submitted that on the date of accident, when the Bajaj M-80 was driven slowely on the top of the bridge, the deceased along with few others was walking in the middle of the road and on seeing them, the rider of another vehicle sounded horn. The deceased panicked and suddenly crossed the road from left to right. Though the rider of Bajaj M-80 applied brake to avoid the accident, the deceased came on his own and dashed against the vehicle and sustained injuries. The fourth respondent further submitted that the accident occurred only due to the negligence and the carelessness of the deceased. He also submitted that at the relevant point of time, the driver had valid driving licence and since his vehicle was insured with the appellant-Insurance Company, the Insurance Company alone is liable to pay compensation.
The appellant-Insurance Company submitted that on the date of accident, the rider of the motorcycle did not have a valid driving licence to drive Bajaj M-80 and the owner of the vehicle had violated the policy condition and therefore, the Company is not liable to pay compensation.
Before the Tribunal, the wife of the deceased and one Shanmugaraj were examined as PW.1 and PW.2. Ex.P1 - F.I.R., dated 31.12.2003; Ex.P3 - Motor Vehicle Inspector''s report dated 14.01.2004 and Ex.P4 - Legal heir certificate were marked on the side of the claimants. On behalf of the appellant-Insurance Company, Motor Vehicle Inspector was examined as RW.1 and Ex.B1 - Xerox copy of the licence and Ex.B2 - Xerox copy of the licence issued to Anandavel were marked. On behalf of the fourth respondent, Ex.B1 - Certificate of insurance of Bajaj M-80 was marked.
The Tribunal, on evaluation of pleadings and evidence, found that the rider of the motorcycle was responsible for the accident and fastened the liability on the appellant-Insurance Company to pay compensation. The rider of the motorcycle had a Learner''s licence from 30.05.2002 to 29.11.2002 and a fresh licence was obtained only on 05.03.2004. The accident occurred on 31.12.2003 and on that date, there was no valid licence. The Tribunal came to the conclusion that since the motorcyclist was not disqualified for driving the vehicle, it cannot be said that there is violation of policy condition. Under such circumstances, the Tribunal held that the appellant-Insurance Company has to indemnify the owner of the vehicle. Aggrieved by the finding with regard to liability, the appellant-Insurance Company has preferred this appeal.
The Supreme Court in Oriental Insurance Co. Ltd., v. R. Swaminathan reported in II (2006) ACC 701 has held that in the appeal filed by the Insurance Company challenging liability, cross-objection for enhancement is not maintainable. Therefore, the cross-objection filed by the claimant for enhancement of compensation is dismissed.
Heard both sides.
Learned Counsel for the appellant submitted that the rider of the motorcycle had driving licence for the period between 30.05.2002 and 29.11.2002 and the accident had occurred on 31.11.2003. As there was no valid and effective licence on the date of the accident, the Insurance Company is not liable to the pay compensation. He further submitted that the Tribunal has erred in directing the Insurance Company to pay compensation on the ground that the driver of the vehicle was not disqualified to drive the vehicle. He further submitted that there is wilful fundamental breach of policy condition by the insured, as the rider of the motorcycle, viz., Anandavel on the date of accident, i.e., on 30.11.2003 had no valid licence and therefore, the Insurance Company is not liable to pay compensation.
Learned Counsel for the appellant submitted that in order to establish the breach of policy condition by the insured, the appellant-Insurance Company has marked Ex.X1 - Copy of the licence issued to the rider of the motorcycle, to prove that the motorcyclist, Andavel did not possess valid licence on the date of the accident. It is also evident from the oral testimony of RW.1, the Motor Vehicle Inspector, that the fourth respondent obtained a fresh licence only on 05.03.2004, only after one year and one month from the date of expiry of the licence and five months from the date of accident. Placing reliance on the decisions in Branch Manager, National Insurance Company Ltd., Karaikudi Vs. R. Lakshmanan and another, , National Insurance Co. Ltd., v. Swaran Singh 2004 (1) LW 734, Bharti Vs. Gujubai and Others, , National Insurance Co. Ltd. Vs. Kusum Rai and Others, and Eswar Chandra and Ors. v. The Oriental Insurance Company Ltd. and Ors. 2007 CDJ SC 279, learned Counsel for the appellant submitted that if the appellant-Insurance Company has proved that the rider of the fourth respondent did not possess a valid and effective licence to ride the motor cycle on the date of accident, then it has discharged its burden that there was violation of policy condition and therefore, the appellant-Insurance Company is not liable to pay compensation. Learned Counsel for the appellant also submitted that in any event, the Tribunal ought to have given the liberty to the appellant- Insurance Company to recover the award amount from the fourth respondent viz., owner of the vehicle, after satisfying the decree.
Before analyzing the case laws cited by the learned Counsel appearing for the parties, it is useful extract the relevant provisions dealing with the licence and the liability of the Insurance Company:
Necessity for driving licence: (1) 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 shall so drive a transport vehicle other than a motor cab or motor cycle hired for his own use or rented under any scheme made under Sub-section (2) of Section 75 unless his driving licence specially entitles him so to do.
(2) The conditions subject to which Sub-section (1) shall not apply to a person receiving instructions in driving a motor vehicle shall be such as may be prescribed by the Central Government.
Form and contents of licences to drive:- (1) Every learner''s licence and driving licence, except a driving licence issued u/s 18, shall be in such form and shall contain such information as may be prescribed by the Central Government.
(2) A learner''s licence or, as the case may be, driving licence shall also be expressed as entitling the holder to drive a motor vehicle of one or more of the following classes, namely:
(a) motor cycle without gear;
(b) motor cycle with gear
(c) invalid carriage;
(d) light motor vehicle;
(e) transport vehicle;
(i) road-roller;
(j) motor vehicle of a specified description
Renewal of driving licence:- (1) Any licensing authority may, on application made to it, renew 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 certificate in the same form and in the same manner as is 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.
(2) An application for the renewal of a driving licence shall be made in such form and accompanied by such documents as may be prescribed by the Central Government.
(3) Where the application for the renewal of a driving licence is made previous to, or not more than thirty days after the date of its expiry, the fee payable for such renewal shall be such as may be prescribed by the Central Government in this behalf.
(4) Where the application for the renewal of a driving licence is made more than thirty 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:
Provided that the fee referred to in Sub-section (3) may be accepted by the licensing authority in respect of an application for the renewal of a driving licence made under this sub-section if it is satisfied that the applicant was prevented by good and sufficient cause from applying within the time specified in Sub-section (3):
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 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.
(5) Where the application for renewal has been rejected, the fee paid shall be refunded to such extent and in such manner as may be prescribed by the Central Government.
(6) Where the authority renewing the driving licence is not the authority which issued the driving licence it shall intimate the fact of renewal to the authority which issued the driving licence.
Duty of insurers to satisfy Judgments and awards against persons insured in respect of third party risks: (1)...
(2) No sum shall be payable by an insurer under Sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:
(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:
(i) a condition excluding the use of the vehicle-
(a) for hire or reward, where the vehicle is on the date of contract of insurance a vehicle not covered by a permit to ply for hire or reward, or
(b) for organised racing and speed testing, or
(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or
(d) without side-car being attached where the vehicle is a motor cycle; or
(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or
(b) that the policy is void on the ground that it was obtained by the non-disclosure of a material facts or by a representation of fact which was false is some material particular.
Let me now consider the decisions relied on by the learned Counsel for the appellant,
In Branch Manager, National Insurance Company Ltd., Karaikudi Vs. R. Lakshmanan and another, , if the driver possessed licence to drive a type of vehicle, but did not obtain a specific endorsement required to drive another type of vehicle. The Court held that it is a case of no licence to drive the particular vehicle and under such circumstances, the Company is not liable to pay compensation to the third parties and indemnify the insured. The above reported case is pressed into service to support the contention that if the driver had no valid licence to drive the vehicle on the date of accident, the company need not pay compensation. In the above case, a workman was driving an Autorickshaw and in the course of employment, he met with an accident and sustained injuries. He had licence to drive light motor vehicle, but there was no licence/endorsement to drive Autorickshaw. The contention raised in that appeal was that when driver had a licence to drive light motor vehicle, autorickshaw being of lesser weight than the motor vehicle, he is entitled to drive the autorickshaw. In Para 9 of the judgment, this Court held that,
There can be no dispute over the fact that various types of licences are issued for driving different types of vehicles. It cannot also be disputed that a person should be possessed of an effective driving licence as defined u/s 3 of the Motor Vehicles Act, 1988 and the effective driving licence would mean a valid licence, both as regards the period as well as the type of vehicle. If the validity of the licence is to be determined only on the basis of weight of the vehicle, then all that would be required for a person is to obtain a licence for a heavy motor vehicle and such a person need not obtain separate licence either for light motor vehicle, autorickshaw or two-wheeler. It should be appreciated that each of the said types of vehicles operate on different mechanism, driving skill, capacity to balance the vehicle, etc. A driver of a four-wheeler cannot be presumed to know how to drive a two-wheeler which essentially requires the capacity to balance of the vehicle, etc. A driver of a four-wheeler cannot be presumed to know how to drive a two-wheeler which essentially requires the capacity to balance the vehicle. Likewise, the mechanism of an autorickshaw is also different considering that the process of acceleration, operating clutch and gear and applying brakes, etc., are totally different. That is the reason why the Motor Vehicles Act contemplates issuance of licence to different categories based on test before granting licence. Therefore, the mere weight of the vehicle alone cannot be a deciding factor. In the judgment of the Supreme Court in Ashok Gangadhar Maratha Vs. Oriental Insurance Co. Ltd., , relied on by learned Counsel for the respondents, the issue arose as regards the same type of vehicle. The driver in that particular case had a valid licence to drive a light motor vehicle and what was lacking was only an endorsement authorising him to drive a transport or commercial vehicle. There is no dispute in that case that the vehicle in question also belongs to the same category and type of light motor vehicle.
The Supreme Court while dealing with the cases relating to Claims arising out of accidents caused by persons with learners licence and the liability of the company, in Paragraph Nos. 93 and 94 of the judgment in Swaran Singh''s case cited supra, held that,
A learner''s licence is thus, also a licence within the meaning of the provisions of the said Act. It cannot, therefore, be said that a vehicle when being driven by a learner subject to the conditions mentioned in the licence, he would not be a person who is not duly licensed resulting in conferring a right on the insurer to avoid the claim of the third party. It cannot be said that a person holding a learner''s licence is not entitled to drive the vehicle. Even if there exists a condition in the contract of insurance that the vehicle cannot be driven by a person holding a learner''s licence, the same would run counter to the provisions of Section 149(2) of the said Act.
The provisions contained in the said Act provide also for grant of driving licence which is otherwise a learner''s licence. Section 3(2) and 6 of the Act provides for the restriction in the matter of grant of driving licence. Section 7 deals with such restrictions on granting of learner''s licence. Section 8 and 9 provide for the manner and conditions for grant of driving licence. Section 15 provides for renewal of driving licence. Learner''s licences are granted under the rules framed by the Central Government or the State Governments in exercise of their rule making power. Conditions are attached to the learner''s licences granted in terms of the statute. A persons holding learner''s licence would, thus, also come within the purview of "duly licensed" as such a licence is also granted in terms of the provisions of the Act and the rules framed thereunder. It is now a well-settled principle of law that rules validly framed become part of the statute. Such rules are, therefore, required to be read as a part of main enactment. It is also well-settled principle of law that for the interpretation of statute an attempt must be made to give effect to all provisions under the rule. No provision should be considered surplusage.
As regards liability of the company to pay compensation to the victims of the accident and burden to be discharged by the company to extricate itself from liability, in paragraphs 110 in Clause I to IV, the Supreme Court held as follows:
(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third party risks is a social welfare legislation to extend relief by compensation to the victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.
(ii) Insurer is entitled to raise a defence in a claim petition filed u/s 163-A or Section 166 of the Motor Vehicles Act, 1988 inter alia in terms of Section 149(2)(a)(ii) of the said Act.
(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 licenced driver or one who was not disqualified to drive at the relevant time.
(iv) The insurance companies are, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish ''breach'' on the part of the owner of the vehicle: the burden of proof wherefor would be on them.
In a decision in National Insurance Co. Ltd. Vs. Kusum Rai and Others, , the Supreme Court considered as to whether the Insurance Company can be compelled to pay compensation to the victims, when the accident occurred due to the negligence of the driver, who did not have valid licence to drive a commercial vehicle and whether it constituted breach of condition of contract of insurance. In the reported judgment, the vehicle was used as a taxi for commercial purpose. The driver had licence to drive a light motor vehicle only and did not possess any licence to drive a commercial vehicle and therefore, the Supreme Court held that there was a breach of policy condition of the contract of the Insurance and further held that the Insurance Company is not liable to pay compensation. Ultimately considering the background of the claimants and the aged victim, the Supreme Court directed the company to pay compensation to the legal representatives of the victim and recover the said amount from the owner of the vehicle.
In Eshwar Chandra and Ors. v. The Oriental Insurance Company Ltd. reported in 2007 CDJ SC 279, licence of the driver had expired. On the date of accident, the application for renewal of licence was not filed by the driver within the prescribed period and under such circumstances, the Hon''ble Supreme Court confirmed the view of the High Court that the driver had no valid licence and the direction issued by the High Court to the Insurance Company to pay and recover from the insured was confirmed.
On the other hand, learned Counsel for the fourth respondent, owner of the vehicle, submitted that mere expiry of Learner''s licence during the relevant point of the time does not mean that the rider was disqualified from holding the licence. He further submitted that not possessing a valid licence does not by itself amount to breach of policy condition and if the cause of accident does not have a nexus with non-possession of licence, then, the Insurance Company cannot be exonerated from payment of compensation. He further submitted that mere absence of licence, fake licence or disqualification by itself would not be the defences open to the Insurance Company against the claim made by the third parties. He further submitted that in the absence of proof that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the policy condition regarding the use of the vehicle, the Insurance Company is liable to pay compensation. Placing reliance on the decision in Oriental Insurance Co. Ltd. Vs. Paulose, , he submitted that though the licence expired, it continues to be effective till the licencee is disqualified from holding the licence and under such circumstances, the Insurance Company is liable to pay compensation. He further submitted that non-possession of valid driving licence by the driver is not a ground of defence in terms of statutory provision u/s 149 Sub-clause 2 of the Motor Vehicles Act and therefore, the Insurance Company cannot escape from its liability. In the above reported decision, in Paragraph Nos. 6, 12 and 15, the Court held as follows:
As the respondent No. 3 was duly licenced and was not disqualified from holding the said licence the insurer cannot a void the liability in terms of the award. The contention that the driver did not have an effective driving licence is not a ground of defence permitted in terms of the statutory provision as aforementioned.
The definition of the licence as contained in Section 2(10) does not stipulate any period of validity. Once a licence is issued to one, it shall be regarded that it has been duly issued. The period of effectiveness of a licence is mentioned in Section 14 and on its expiry, it can be renewed as provided in Section 15. That means the licence in spite of the expiry of its validity period, shall continue to exist, unless it has been shown that the licencee had been disqualified to hold one. In such circumstances, it shall have to be regarded that he continues to be duly licensed.
When he is a person duly licensed, the insurer cannot so long as the policy is admitted, avoid the liability to compensate the injured or to indemnify the insured, because none of the conditions in the policy coming within Section 149 (2) has been violated in this case.
In view of the latest pronouncement of the Supreme Court in Eswar Chandra''s case 2007 CDJ Supreme 279, where the Apex Court held that even if the licence granted earlier is not renewed within the prescribed period, then the driver had no valid licence during the relevant period, the decision in Paulose case can no longer be applicable to the facts of this case.
Learned Counsel for the fourth respondent submitted that it is the duty of the Insurance Company to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the conditions of the use of vehicle by the duly licenced driver or one who is not disqualified to drive at the time of accident. In this context, learned Counsel for the fourth respondent placed relied on the decision in Surya Pratap Singh Vs. Sitaliya and Others, . In the reported judgment, as against the oral evidence of the driver who deposed that he had a valid and effective licence at the time of accident, the insurer has not let in evidence through the officer of the Regional Transport Office to prove that the letter sent by them stating that the driver did not have a licence. Therefore, the matter as mentioned in the letter was not considered as proved. However, the Court held that the Insurance Company is liable to pay compensation as per Swaran Singh''s case.
Learned Counsel for the fourth respondent placed reliance on the decision in National Insurance Company Limited v. Parvin Kumar and Ors. reported in 2005(1) TNMAC 540, wherein, the Full Bench of the Punjab and Haryana High Court held that the Insurance Company cannot be absolved from its liability to pay compensation by simply pleading that the licence granted to the driver being for one category or description of the vehicle, but the vehicle involved in the accident was of different class. In Paragraph 10 of the said judgment, the Court held as follows:
The issue being no more res integra, needs no further elaboration. We may, however, hasten to add that the Insurance Company cannot be absolved of its liability to pay compensation by simply pleading that the licence granted to the driver being for one clause or description of the vehicle but the vehicle involved in the accident was different class of description, unless it is proved that the cause of accident was the licence granted to the driver being for one class or description of vehicle but the vehicle involved in the accident was of different class or description. The observations made by the Supreme Court presuppose that if the driver was driving a vehicle, of which he might not be holding licence as such, but was holding a driving licence of a different description of vehicle, and the driving method of both the vehicles, for which licence was obtained and the one which licence was obtained and the one which was being driven, was the same and when even the mechanism of the vehicle is also same, the defence projected by the Insurance Company with regard to the driver not possessing requisite type of licence could be of no avail to it.
We thus overrule the view taken by the Division Bench in National Insurance Company Ltd., (supra) and hold that if on facts, it is found that the accident was caused solely because of some other unforeseen 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 for technical breach of conditions concerning driving licence. The defence projected by the Insurance Company in the context of Section 149(2)(a)(ii) and proviso appended to Sub-sections (4) and (5) of the Motor Vehicles Act, 1988 can succeed only if it is proved that the accident had taken place only because the driver was not possessing requisite type of licence.
The Full Bench judgment of the Himanchal Pradesh High Court deals with a case, where the accident was caused by a person, who did not possess the requisite type of licence. The Full Bench of the Punjab and Haryana High Court held that the defence projected by the Insurance Company with regard to the driver possessing requisite type of licence could be no avail. The above judgment is no longer a good law in view of the judgment of the Supreme Court in Kusum Rai''s case, where the Supreme Court has held that it is open to the Insurance Company to raise a defence u/s 149(2) of the Motor Vehicles Act that there is a breach of condition of contract of Insurance, where the holder of a light motor vehicle causes an accident while driving a commercial vehicle.
A Division Bench of Madhya Pradesh High Court in Bharti Vs. Gujubai and Others, , held that in the absence of the finding rendered by the Tribunal that the owner of the vehicle knew about the defect in the licence, the Insurance Company is liable to pay compensation. However, liberty was given to recover the amount from the owner by establishing before proper forum and the owner knew about the defect in the licence.
It is evident from the pleadings that the Learner''s licence was valid between 30.05.2002 to 29.11.2002 and the said licence expired on 29.11.2002. After the expiry of one year and one month, the motorcyclist had obtained permanent licence on 05.03.2004 and therefore, he did not have valid licence on the date of accident, viz., 30.10.2003. Though the owner of the vehicle, the fourth respondent in the appeal has filed a counter affidavit, he has failed to let in evidence before the Tribunal that he has made proper verification that the driver had valid driving licence on the date of accident.
On the other hand, the appellant-Insurance Company has let in evidence to prove that the driver had obtained permanent licence on 05.03.2004 on and they have discharged their onus and proved that the driver had no valid licence on the date of accident.
The Apex Court in Swaran Singh''s case has held that 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 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. The owner of the motor vehicle has responsibility to verify that his vehicle is not driven by a person who does not satisfy the provisions of Sections 3 and 4 of the Motor Vehicles Act, 1988. In the present case, evidence available on record is not clinching or specific as to prove that the owner consciously allowed the driver to drive the vehicle.
Even in the absence of a finding rendered by the Tribunal that the owner of the vehicle knew about the defect in the licence, in Bharati''s case, (cited supra) the Division Bench has held that the Insurance Company is liable to pay compensation and liberty is given to the Insurance Company to recover from the owner by establishing before the proper forum that the owner knew about the defect in the licence.
In the latest decision in Eswar Chandra and Ors. v. The Oriental Insurance Company Ltd. and Ors. 2007 CDJ SC 279, though the driver was duly licenced by the Licencing Authority, the driver did not have a valid licence, on the date of accident, the Supreme Court confirmed the, decision of the Tribunal, whereby, the Insurance Company was directed to pay the award to the third party-claimant and initiate appropriate proceedings against the owner and driver of the vehicle for realisation of the award amount, subject to establishing its case before the Tribunal. In the instant case, before the Tribunal, the Insurance Company has produced Ex.B1, Driving Licence, to prove that the licence had already expired and it was not in force on the date of accident. But mere fact that there was breach of terms and conditions subject to which insurance policy was issued cannot exonerate the insurance company from its liability to pay compensation to third party. Omission to get the licence renewed or obtain a permanent licence would not amount to a fundamental breach of policy condition to absolve the company from its liability to pay compensation.
Following the decisions of the Supreme Court in Eswar Chandra''s case and Bharathi''s case and considering the benefitial legislation of the Motor Vehicles Act, 1988, where the Court/Tribunal has to protect the interest of innocent third party-claimants, the proper course to be adopted would be to direct the appellant-Insurance company to pay compensation to the third party and initiate proceedings for recovery.
Since the cross-appeal filed by the claimants is dismissed, Registry is directed to refund the Court fee paid on the appeal memorandum, after making necessary deductions in accordance with law.
In the result, the Civil Miscellaneous Appeal is partly allowed. No costs. Cross-objection No. 3 of 2007 filed by the claimants is dismissed. Consequently, connected miscellaneous Petition is also closed.