India Assurance Co. Ltd Vs. Prabhu Lal  Insc 1204 (30 November 2007)
Thakker & Tarun Chatterjee
APPEAL NO. 5539 OF 2007 ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 7370
OF 2004 WITH
C.A. NO. 5540 OF 2007 @ SLP(C) NO. 17794
OF 2004 C.A. NO. 5541 OF 2007 @ SLP(C) NO. 7618
OF 2005 C.K. THAKKER, J.
all these appeals, a common question of law has been raised by the parties.
therefore, appropriate if we deal with and decide all the appeals by a common judgment.
In all the three appeals, the claim of the claimant has been upheld finally by
the National Consumer Disputes Redressal Commission, New Delhi ('National Commission' for short)
which has been challenged by the Insurance Company in this Court.
appreciate the controversy, it would be appropriate if we narrate the facts in
the first case i.e. New India Assurance Co. Ltd. v. Prabhu Lal.
complaint was filed by the complainant Prabhu Lal under Section 12 of the
Consumer Protection Act, 1986 before the District Consumer Disputes Redressal
Forum, Kota (Rajasthan) ('District Forum' for short) claiming compensation from
the respondent Insurance Company as also from Tata Finance Limited, Jaipur. The
case of the complainant was that he purchased a vehicleTata 709 with
Registration No. RJ-20G-2828 from Tata Finance Limited, Jaipur. The insurance
was taken from New India Assurance Company effective from October 17, 1997 to October 16, 1998. Premium amount of Rs.8235/- was duly paid. It was the case
of the complainant that on April 17, 1998,
the vehicle of the complainant was being driven by Mohd. Julfikar to Indore for getting Chilly.
about 4.30 a.m. in the early morning, the driver of
Roadways Bus No. MP 13-C-3935 drove the bus with very high speed in rash and
negligent manner which resulted in an accident at Yashwant Nagar. Due to said
accident, Ram Narainbrother of the complainant who was sitting with Mohd. Julfikar,
sustained injuries. Mohd. Julfikar immediately ran away leaving the vehicle but
as Ram Narain received serious injuries, he could not come out of the vehicle.
The complainant lodged First Information Report (FIR) No. 131 of 1998 with the Manpur
Police Station, Yashwant Nagar, District Indore under Sections 279 and 337 of
the Indian Penal Code (IPC) against driver Kalu of M.P. Roadways Bus. Vehicle
of the complainant was then inspected by Tatas, estimate was prepared and claim
was submitted in the prescribed form by the complainant to the Insurance
Company on June 12,
1998. The amount of
the claim was, however, not paid to the complainant. The complainant,
therefore, moved the District Forum praying for an award of Rs.4,70,000/-
towards the claim of vehicle, Rs.15,000/- towards mental agony, Rs.5,000/-
towards driving charges of the vehicle from Indore to Kota and Rs.25,000/- for survey fee.
Insurance Company filed its reply refuting the claim of the complainant.
to the Company, it had not committed any deficiency in rendering 'service'. It
was also the case of the Company that it had fulfilled all contractual
obligations as to claim. The Company informed the complainant about its
decision on December
21, 1999 stating that
the claim was not allowable and the amount was not payable. The Insurance
Company, therefore, prayed for the dismissal of the complaint.
According to the District Forum, the main question was whether the Insurance
Company was deficient in rendering service and wrongly disallowed insurance
claim of the complainant.
Forum considered the question and heard the parties. According the complainant,
at the time of accident, vehicle was driven by Mohd. Julfikar who was having a licence
to drive Light Motor Vehicle (LMV) as also Heavy Motor Vehicle (HMV). In spite
of it, the Insurance Company disallowed the insurance claim of the complainant
on the ground that the driver was not having valid driving licence to drive the
vehicle in question. It was also the contention of the complainant that certain
documents produced by the Insurance Company were not genuine. The complainant
was not an educated man and he knew only how to sign. If the officials of
Insurance Company had obtained signatures of the complainant on certain
documents without reading over to him and making him properly understood, the
complainant should not suffer. According to the complainant, Insurance Company
wrongly presumed and proceeded on the basis that the vehicle was driven by Ram Narain
at the time of accident, who was having a valid driving licence to drive only
Light Motor Vehicle and negatived the claim. It was, therefore, prayed that an
award be passed in favour of the complainant.
case of the Insurance Company, on the other hand, was that the vehicle in
question, at the time of accident, was driven by Ram Narain, brother of the
Ram Narain was possessing licence to drive Light Motor Vehicle and not Heavy
Motor Vehicle. He, therefore, could not have driven Transport Vehicle in
absence of necessary endorsement as required and the Insurance Company could
not be held liable. In this connection, Insurance Company relied on the permit
issued by Transport Authority, the Form submitted by the complainant, licence
issued and other documents. The Insurance Company also relied upon FIR filed at
Police Station, Manpur, wherein it was stated that the vehicle was driven by
Ram Narain. Moreover, when the officers of the Insurance Company approached the
complainant, they were informed by the complainant that the vehicle was driven
by Ram Narain. As an after thought, only with a view to get the amount of
compensation, it was asserted and a case had been put forward before the
Consumer Forum that the vehicle was driven by Mohd. Julfikar. It was contended
that the complainant realized belatedly that if true facts would be placed
before the Forum, in view of legal position, he would not be able to get any
amount from the Insurance Company. It was, therefore, asserted that Mohd. Julfikar
was driving the vehicle but it was not true. The Insurance Company, hence,
submitted that there was no deficiency in rendering service by the Company and
the claim was liable to be dismissed.
Tata Finance Limited, Jaipur in its reply stated that the complainant had
purchased the vehicle on the basis of Hire Purchase Agreement and the amount
was to be paid in instalments. At the time of incident, Rs.3,65,026/- were due
and payable to the Company. Until the full amount was paid, the Financer was to
remain owner of the vehicle. It was also stated that though Tata Finance
Company requested the Insurance Company several times to make payment of the
balance hire purchase amount, it was not done.
District Forum, after considering the rival contentions of the parties and
referring to the case law on the point, particularly a decision of this Court
in Ashok Gangadhar Maratha v. Oriental Insurance Co. Ltd., (1999) 6 SCC 620,
held that the complainant was not entitled to compensation.
to the District Forum, in Ashok Gangadhar, this Court held that if the driver
was having effective driving licence to ply Light Motor Vehicle (LMV), he could
not have plied Heavy Motor Vehicle (HMV) or Transport Vehicle. The District
Forum observed that from the evidence on record, it was proved that at the time
of accident, Ram Narain was plying the vehicle in question and not Mohd. Julfikar
as asserted. Ram Narain was having valid and effective driving licence to ply
Light Motor Vehicle and as such he could not have plied the transport vehicle.
The claim was, therefore, not tenable and accordingly the complaint was
Being aggrieved by the order passed by the District Forum, the claimant
approached the Consumer Disputes Redressal Commission of Rajasthan, Jaipur
('State Commission' for short). The State Commission held that the principle
laid down in Ashok Gangadhar would apply. But according to the State
Commission, the District Forum was not right in dismissing the claim observing
that the said decision was against the complainant. In fact, the point was
decided in favour of the complainant and the complainant-claimant would be
entitled to the benefit of the judgment and the Insurance Company must be held
liable. Accordingly, the appeal was allowed. The order passed by the District
Forum was set aside and the Insurance Company was ordered to pay the amount
mentioned in the operative part of the judgment along with interest at the rate
of 15% p.a.
Aggrieved Insurance Company approached National Forum against the order passed
by the State Commission but the National Commission also dismissed the Revision
and confirmed the order passed by the State Commission. It is this order which
is challenged in this Court.
April 23, 2004, notice was issued by the Court. It
appears that meanwhile in other matters, a similar question came up before this
Court and hence all the matters were ordered to be placed for hearing together.
have heard learned counsel for the parties.
The learned counsel for the appellant- Insurance Company contended that the
State Forum as well as National Forum had committed an error of law in holding
the appellant- Insurance Company liable and directing it to pay compensation.
It was submitted that there was no deficiency on the part of the appellant-
Company in rendering service to the complainant and hence Consumer Forum had no
jurisdiction to entertain, deal with and decide the dispute. It was also
submitted that it was clearly established from the relevant documents on record
that at the time of accident, Ram Narain was plying the vehicle and not Mohd. Julfikar.
Ram Narain was having valid driving licence to ply Light Motor Vehicle. The
vehicle in question was a transport vehicle and hence it could not have been
plied by Ram Narain. In absence of valid licence to drive the said vehicle, the
complainant could not claim compensation from the Insurance Company and no
direction could be issued to the Company to pay compensation to the
complainant. The District Forum was, therefore, fully justified in dismissing
complaint of the respondent- complainant and both, State Commission as well as
National Commission were in error in granting the prayer of the complainant
and the orders passed by them are liable to be set aside. It was also submitted
by the learned counsel that State Commission as also National Commission,
misunderstood Ashok Gangadhar. It is no doubt true that in Ashok Gangadhar, the
claim of the complainant was upheld by this Court. But it was because the
relevant documentary evidence was not placed before the Authorities. This
Court, therefore, held that since material documents were not produced by the
Company, the complainant should not suffer and in absence of such evidence, the
Insurance Company cannot be absolved of liability. But the ratio laid down in Ashok
Gangadhar supports the case of the Insurance Company that if necessary
documents are on record and they go to show that the licence issued in favour
of the driver to ply a particular type of vehicle, he could not have plied
other vehicle and the Insurance Company could not be held liable if there was
breach of that condition. In the case on hand, all the documents were on
record, contention was raised by the Insurance Company from the very beginning
that the vehicle was a transport vehicle, which driven by Ram Narain who was
holding licence to ply only Light Motor Vehicle. Hence, he could not have plied
the vehicle in question, a finding was recorded in favour of the Insurance
Company by the District Forum which had not been disturbed by the State
Commission or by the National Commission and hence the complaint ought to have
The learned counsel for the respondent submitted that it was the case of the
complainant before District Forum that the vehicle was driven by Mohd. Julfikar
who possessed valid licence to ply the vehicle but as soon as the accidence
took place, he fled away since he was scared that passengers in the bus might
not spare him and he might be beaten.
Narain sustained several injuries, he could not go away. Unfortunately, the
District Forum dismissed the complaint which necessitated challenging the
decision and the complainant succeeded before the State Forum and National
Forum. As to Ashok Gangadhar, the counsel submitted that the said decision
helps the complainant and both the Commissions were right in following it and
in directing the Insurance Company to pay compensation to the complainant. He,
therefore, submitted that the appeal deserves to be dismissed.
Before we deal with contentions raised by the parties on merits, it would be
appropriate to examine the relevant provisions of the Motor Vehicles Act, 1988
(hereinafter referred to as 'the Act'). By the Act of 1988, the Motor Vehicles
Act, 1939 (old Act) had been repealed. The new Act has been enacted with a view
'to consolidate and amend the law relating to motor vehicles'. Section 2 is a
'legislative dictionary' and defines various terms. Relevant clauses of the
said section are Clauses (10), (14), (21), (28) and (47) which define 'driving licence',
'goods carriage', 'light motor vehicle', 'motor vehicle' and 'transport
vehicle' respectively. They read as under:
Definitions.- In this Act, unless the context otherwise requires,--
"driving licence" means the licence issued by a competent authority
under Chapter II authorising the person specified therein to drive, otherwise
than as a learner, a motor vehicle or a motor vehicle of any specified class or
"goods carriage" means any motor vehicle constructed or adapted for
use solely for the carriage of goods, or any motor vehicle not so constructed
or adapted when used for the carriage of goods;
"light motor vehicle" means a transport vehicle or omnibus the gross
vehicle weight of either of which or a motor car or tractor or road-roller the unladen
weight of any of which, does not exceed 7,500 kilograms;
"motor vehicle" or "vehicle" means any mechanically
propelled vehicle adapted for use upon roads whether the power of 1 Subs. &
ins. by Act. 580 propulsion is transmitted thereto from an external or internal
source and includes a chassis to which a body has not been attached and a
trailer; but does not include a vehicle running upon fixed rails or a vehicle
of a special type adapted for use only in a factory or in any other enclosed
premises or a vehicle having less than four wheels fitted with engine capacity
of not exceeding thirty-five cubic centimetres;
"transport vehicle" means a public service vehicle, a goods carriage,
an educational institution bus or a private service vehicle;
3(1) of the Act requires holding of driving licence which is material and reads
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 hired for his own use or rented under any scheme made
under sub- section (2) of section 75 unless his driving licence specifically
entitles him so to do.
Section 5 declares that no owner or person in charge of a motor vehicle shall
cause or permit any person which does not satisfy the provisions of Section 3
to drive the vehicle.
10 deals with form and contents of licences. It enacts that every driving licence
(except a driving licence issued under Section 18 which provides for driving
motor vehicles belonged to the Central Government) shall be in such form and
shall contain such information as may be prescribed by the Central Government.
It also states that a driving licence shall be expressed as entitling the
driver to drive a motor vehicle of one or more of the types of motor vehicles
specified in sub-section (2).
15 provides for 'renewal of driving licences'. Section 27 empowers the Central
Government to make rules in respect of matters enumerated therein. Section 66
prohibits an owner of motor vehicle to use or to permit the use of motor
vehicle as a transport vehicle in any public place save in accordance with the
conditions of permit granted by an appropriate authority. Whereas Section 147
deals with requirements of policies and limits of liability, Section 149
imposes duty on insurers to satisfy judgments and awards against persons
insured in respect of third party risks.
The Central Government has framed rules known as the Central Motor Vehicles
Rules, 1989 (hereinafter referred to as 'the Rules').
Rule 16 of the Rules prescribes the form in which driving licence is issued.
The form provides that the holder of a licence can drive any vehicle of the
description mentioned therein. Where authorization is granted to drive
transport vehicle, it is expressly so provided by making an endorsement to that
Now, it is the case of the Insurance Company that the vehicle of the
complainant which met with an accident was a 'transport vehicle'. It was
submitted that the insured vehicle was a 'goods carriage' and was thus a
'transport vehicle'. The vehicle was driven by Ram Narain, who was authorized
to drive Light Motor Vehicle and not a transport vehicle.
the driver had no licence to drive transport vehicle in absence of necessary
endorsement in his licence to that effect, he could not have driven Tata 709
and when that vehicle met with an accident, Insurance Company could not be made
liable to pay compensation.
Now, let us consider both these points. As far as vehicle is concerned, it is
clear from the record that it was Tata 709, registration No.RJ-20G-2828. The
permit in respect of the said vehicle is on record issued by the Transport
Authority, Kota. From the registration, it is clear
that it was registered as a truck, a goods carrier and was described as public
carrier. Load carrying capacity was shown to be 4100.00 Kgs. The permit was valid
up to November 11, 2002.
The District Forum held that the documents clearly mentioned that the vehicle
was a 'goods carriage' as defined in Section 2(14) covered by the category of
'transport vehicle' under Section 2(47) of the Act. The State Commission held
that since the gross weight of the vehicle was only 6800 Kgs and did not exceed
permissible limits (7500 Kgs) nor it was carrying goods at the time of
accident, it was a Light Motor Vehicle. For coming to that conclusion, the
State Commission relied upon Ashok Gangadhar.
our considered view, the State Commission was wrong in reversing the finding
recorded by the District Forum. So far as Ashok Gangadhar is concerned, we will
deal with the said decision little later but from the documentary evidence on
record and particularly, from the permit issued by the Transport Authority, it
is amply clear that the vehicle was a 'goods carrier' [Section 2(14)]. If it is
so, obviously, it was a 'transport vehicle' falling under clause (47) of
Section 2 of the Act. The District Forum was, therefore, right in considering
the question of liability of the Insurance Company on the basis that Tata 709
which met with an accident was 'transport vehicle'.
The second question is as to who was driving the vehicle which collided with
M.P. Roadways Bus on April
17, 1998. In this
connection, it may be stated that it was the case of the complainant that the
vehicle (Tata 709) was driven by Mohd. Julfikar to Indore.
of rash and negligent driving by Kalu, driver of other vehicle i.e. M.P.
Roadways bus, there was an accident and Ram Narain, brother of the complainant,
sustained serious injuries.
was having valid licence to drive Light Motor Vehicle (LMV) as well as Heavy
Motor Vehicle (HMV) and hence the complainant was entitled to compensation from
the Insurance Company.
The contention of the Insurance Company, on the other hand, was that it
conducted an inquiry which revealed that at the time of accident it was not Mohd.
Julfikar who was driving the vehicle, but it was Ram Narain who was driving it.
Ram Narain was having licence to drive Light Motor Vehicle only and since the
vehicle in question was a transport vehicle, he could not have driven the said
vehicle in absence of an endorsement as required by law and hence the
complainant was not entitled to any amount from the Insurance Company and the
Insurance Company could not be held liable.
The District Forum, as observed earlier, considered the assertion of the
complainant and the defence of the Insurance Company as to who was driving Tata
709 and on the basis of overall evidence adduced before it, held that it was
Ram Narain who was driving the vehicle that met with an accident. The said Ram Narain
was not having licence to drive transport vehicle and as such, Insurance
Company was not liable. The District Forum noted that in the FIR lodged in
respect of the accident, Ram Narain was shown to be the driver of the vehicle.
Not only that but the evidence adduced before the District Forum also went to
show that at the time of accident, Ram Narain was the driver of the insured
vehicle. The argument of the complainant that the officials of the Insurance
Company obtained his signatures on some documents without reading them over and
making the claimant to understand the contents thereof was negatived. The
assertion of the complainant that he was 'illiterate' and was knowing only how
to put his signature was also not believed by the District Forum. The said
finding of fact has not been set aside either by the State Commission or by the
National Commission. Even otherwise, from the evidence on record, we are
satisfied that it was Ram Narain who was driving the vehicle at the time of
accident. We have, therefore, to proceed to consider whether the complainant
was entitled to claim compensation from the Insurance Company in such an
The argument of the Insurance Company is that at the time of accident, Ram Narain
had no valid and effective licence to drive Tata 709. Indisputably, Ram Narain
was having a licence to drive Light Motor Vehicle. The learned counsel for the
Insurance Company, referring to various provisions of the Act submitted that if
a person is having licence to drive Light Motor Vehicle, he cannot drive a
transport vehicle unless his driving licence specifically entitles him so to do
(14), (21), (28) and (47) of Section 2 make it clear that if a vehicle is
'Light Motor Vehicle', but falls under the category of Transport Vehicle, the
driving licence has to be duly endorsed under Section 3 of the Act. If it is
not done, a person holding driving licence to ply Light Motor Vehicle cannot
ply transport vehicle. It is not in dispute that in the instant case, Ram Narain
was having licence to drive Light Motor Vehicle. The licence was not endorsed
as required and hence, he could not have driven Tata 709 in absence of
requisite endorsement and Insurance Company could not be held liable.
find considerable force in the submission of the learned counsel for the
Insurance Company. We also find that the District Forum considered the question
in its proper perspective and held that the vehicle driven by Ram Narain was
covered by the category of transport vehicle under Clause (47) of Section 2 of
the Act. Section 3, therefore, required the driver to have an endorsement which
would entitle him to ply such vehicle. It is not even the case of the
complainant that there was such endorsement and Ram Narain was allowed to ply
transport vehicle. On the contrary, the case of the complainant was that it was
Mohd. Julfikar who was driving the vehicle. To us, therefore, the District
Forum was right in holding that Ram Narain could not have driven the vehicle in
The learned counsel for the complainant, however, heavily relied upon Ashok Gangadhar.
In that case, the appellant was the owner of a truck, Light Motor Vehicle,
which was insured with the respondent Insurance Company. The vehicle met with
an accident and a claim was lodged by the complainant before the Consumer
Commission. It was contended by the Insurance Company that the truck was a
goods carriage or a transport vehicle and since the driver of the truck was
holding a driving licence issued in Form No.6 to drive light motor vehicle
only, he was not authorized to drive transport vehicle as there was no
endorsement on his driving licence authorizing him to drive such transport
vehicle. The aggrieved complainant approached this Court.
the appeal and setting aside the order passed by the Commission, this Court
held that the driver of the vehicle was holding a valid driving licence for
driving a Light Motor Vehicle and there was no material on record to show that
he was disqualified from holding an effective valid licence at the time of
accident. In view of those facts, the Court held that the policy did not insist
on the driver to have a licence to drive a transport vehicle by obtaining a
the definition of 'Light Motor Vehicle' as given in Clause (21) of Section 2 of
the Act, this Court held that such Light Motor Vehicle (LMV) cannot always mean
a light goods carriage. A Light Motor Vehicle (LMV) can be a non-transport
vehicle as well. The Court proceeded to observe that since there was neither a
pleading nor a permit produced on record, the vehicle remained as a Light Motor
Vehicle. And though it can be said to have been designed to use as a transport
vehicle or a goods carriage, it could not be held on account of statutory
prohibition contained in Section 66 of the Act to be a transport vehicle. It
was, therefore, held that the Commission was not right in rejecting the claim
of the claimant. Accordingly this Court set aside the order passed by the
Commission and directed the Insurance Company to pay compensation to the
is no doubt true that in Ashok Gangadhar, in spite of the fact that the driver
was holding valid driving licence to ply Light Motor Vehicle (LMV), this Court
upheld the claim and ordered the Insurance Company to pay compensation. But, in
our considered opinion, the learned counsel for the Insurance Company is right
in submitting that it was because of the fact that there was neither pleading
nor proof as regards the permit issued by the Transport Authority. In absence
of pleading and proof, this Court held that, it could not be said that the
driver had no valid licence to ply the vehicle which met with an accident and
he could not be deprived of the compensation.
is clear if one reads paragraph 11 of the judgment, which reads thus:
To reiterate, since a vehicle cannot be used as transport vehicle on a public
road unless there is a permit issued by the Regional Transport Authority for
that purpose, and since in the instant case there is neither a pleading to that
effect by any party nor is there any permit on record, the vehicle in question
would remain a light motor vehicle. The respondent also does not say that any
permit was granted to the appellant for plying the vehicle as a transport
vehicle under Section 66 of the Act, Moreover, on the date of accident, the
vehicle was not carrying any goods, and though it could be said to have been
designed to be used as a transport vehicle or goods-carrier, it cannot be so
held on account of the statutory prohibition contained in Section 66 of the
our judgment, Ashok Gangadhar did not lay down that the driver holding licence
to drive a Light Motor Vehicle need not have an endorsement to drive transport
vehicle and yet he can drive such vehicle. It was on the peculiar facts of the
case, as the Insurance Company neither pleaded nor proved that the vehicle was
transport vehicle by placing on record the permit issued by the Transport
Authority that the Insurance Company was held liable.
the present case, all the facts were before the District Forum. It considered
the assertion of the complainant and defence of the Insurance Company in the
light of the relevant documentary evidence and held that it was established
that the vehicle which met with an accident was a 'transport vehicle'. Ram Narain
was having a licence to drive Light Motor Vehicle only and there was no
endorsement as required by Section 3 of the Act read with Rule 16 of the Rules
and Form No.6. In view of necessary documents on record, the Insurance Company
was right in submitting that Ashok Gangadhar does not apply to the case on hand
and the Insurance Company was not liable.
The matter can be looked from another angle also. Section 14 referred to above,
provides for currency of licence to drive motor vehicles. Sub-section (2)
thereof expressly enacts that a driving licence issued or renewed under the Act
shall, "in the case of a licence to drive a transport vehicle, be
effective for a period of three years". It also states that "in the
case of any other licence, if the person obtaining the licence, either
originally or on renewal thereof, had not attained the age of fifty years on
the date of issue or, as the case may be, renewal thereof, be effective for a
period of twenty years from the date of such issue or renewal". It is thus
clear that if a licence is issued or renewed in respect of a transport vehicle,
it can be done only for a period of three years. But, in case of any other
vehicle, such issuance or renewal can be for twenty years provided the person
in whose favour licence issued or renewed had not attained the age of 50 years.
In the present case, the licence was renewed on November 17, 1995 upto November
16, 2015 i.e. for a
period of twenty years. From this fact also, it is clear that the licence was
in respect of 'a motor vehicle other than the transport vehicle'.
The learned counsel for the Insurance Company also referred to a decision of
this Court in National Insurance Company vs. Kusum Rai & Ors., (2006) 4 SCC
250, wherein this Court held that if the vehicle is a taxi which is being
driven by a driver holding licence for driving Light Motor Vehicle only without
there being any endorsement for driving transport vehicle, the Insurance
Company cannot be ordered to pay compensation.
may also refer to a decision of the High Court of Himachal Pradesh in New India
Assurance Co. Ltd., Shimla v. Suraj Prakash & Ors., AIR 2000 HP 91. There
the vehicle involved in an accident was taxi, a public service vehicle. But the
licence issued in favour of the driver was to ply light motor vehicle and there
was no endorsement to drive transport vehicle. It was, therefore, held by the
High Court that the Insurance Company cannot be saddled with the liability to
pay compensation to the claimant. There too, the claimant placed reliance on Ashok
Court, however, distinguished it observing that "there was neither any
evidence therein nor was there any claim for insurer that the vehicle concerned
therein was having a permit for goods carriage or that it had a permit or
authorization for plying the vehicle as a transport vehicle". In our
considered view, the High Court was right in taking the above view.
The learned counsel for the complainant invited our attention to certain
decisions of this Court. In Skandia Insurance (1987) 2 SCC 654, it was held
that if a truck driver leaves the truck with engine in motion after handing
over the truck to cleaner who was not a duly licensed person who drives the
truck which causes an accident, it cannot be contended by the Insurance Company
that it would not be liable to pay compensation to a third party who sustains
injury because of the accident.
The ratio laid down in Skandia Insurance Co. Ltd., in our considered opinion, does
not apply to the case on hand as it was in respect of 'third party' that the
Court held that the Insurance Company must pay compensation. This is clear from
paragraph 13 of the judgment in which the Court stated:
In order to divine (sic derive) the intention of the legislature in the course
of interpretation of the relevant provisions there can scarcely be a better
test than that of probing into the motive and philosophy of the relevant
provisions keeping in mind the goals to be achieved by enacting the same.
Ordinarily it is not the concern of the legislature whether the owner of the
vehicle insures his vehicle or not. If the vehicle is not insured any legal
liability arising on account of third party risk will have to be borne by the
owner of the vehicle. Why then has the legislature insisted on a person using a
motor vehicle in a public place to insure against third party risk by enacting
Section 94. Surely the obligation has not been imposed in order to promote the
business of the insurers engaged in the business of automobile insurance. The
provision has been inserted in order to protect the members of the Community travelling
in vehicles or using the roads from the risk attendant upon the user of motor
vehicles on the roads. The law may provide for compensation to victims of the
accidents who sustain injuries in the course of an automobile accident or
compensation to the dependents of the victims in the case of a fatal accident.
However, such protection would remain a protection on paper unless there is a
guarantee that the compensation awarded by the Courts would be recoverable from
the persons held liable for the consequences of the accident. A Court can only pass an award or a decree.
It cannot ensure that such an award or decree results in the amount awarded
being actually recovered, from the person held liable who may not have the
resources. The exercise undertaken by the law Courts would then be an exercise
the outcome of the legal proceedings which by the very nature of things involve
the time cost and money cost invested from the scarce resources of the
Community would make a mockery of the injured victim, or the dependents of the
deceased victim of the accident, who themselves are obliged to incur not
inconsiderable expenditure of time, money and energy in litigation. To overcome
this ugly situation the legislature has made it obligatory that no motor
vehicle shall be used unless a third party insurance is in force. To use the
vehicle without the requisite third party insurance being in force is a penal
offence (Section 94 of the Motor Vehicles Act). The legislature was also faced
with another problem. The insurance policy might provide for liability walled
in by conditions which may be specified in the contract of policy. In order to
make the protection real, the legislature has also provided that the judgment
obtained shall not be defeated by the incorporation of exclusion clauses other
than those authorised by Section 96 and by providing that except and save to
the extent permitted by Section 96 it will be the obligation of the Insurance
Company to satisfy the judgment obtained against the persons insured against
third party risks. (vide Section 96). In other words, the legislature has
insisted and made it incumbent on the user of a motor vehicle to be armed with
an insurance policy covering third party risks which is in conformity with the
provisions enacted by the legislature.
so provided in order to ensure that the injured victims of automobile accidents
or the dependents of the victims of fatal accidents are really compensated in
terms of money and not in terms of promise. Such a benign provision enacted by
the legislature having regard to the fact that in the modern age the use of
motor vehicles notwithstanding the attendant hazards, has become an inescapable
fact of life, has to be interpreted in a meaningful manner which serves rather
than defeats the purpose of the legislation. The provision has therefore to be
interpreted in the twilight of the aforesaid perspective".
Similar is the reasoning and Insurance Co.
Ltd., (1996) 4 SCC 647. In that case, there was breach of condition as to carry
passengers in a goods vehicle more than the number permitted in terms of
Court there held that the breach of the said provision could not be said to be
such a fundamental character so as to afford ground to the insurer to deny
indemnification unless there were some factors which contributed to the causing
of the accident. The Court held that exclusionary permission in the insurance
policy must be retained so as to serve the main purpose of the policy which was
to indemnify the damage caused to the vehicle.
Co. Ltd. & Anr, (2003) 6 SCC 420, the Court held that if the vehicle was
damaged due to accidental fire, the fact that the driver was not holding valid
driving licence at the time of incident would not empower the Insurance Company
to repudiate the claim and it could not be put forward as a ground to deny the
liability of the Insurance Company that the driver did not have valid licence
at the time of accident in question.
Finally, a reference was made to Ors, (2004) 3 SCC 297. That case also related
to third party victims of motor vehicle accidents and to us the ratio in Swaran
Singh does not carry the case of the claimant further.
For the aforesaid reasons, in our opinion, the conclusion arrived at by the
District Forum cannot be said to be faulty and it was right in holding that on
the basis of the evidence adduced by the Insurance Company, the complainant was
not entitled to claim any compensation from the Insurance Company and Insurance
Company cannot be held liable. The decision could not have been interfered with
by the State Commission or by the National Commission and hence the orders of
the State Commission and National Commission are liable to be set aside by
restoring the order passed by the District Forum. we do accordingly.
The appeal is, therefore, allowed. The orders passed by the State Commission
and National Commission are set aside and the order passed by the District
Forum is restored.
the matter of Nasir Ahmed (SLP No. 7618 of 2005), the vehicle was a luxury taxi
passenger carrying commercial vehicle. There also the driving licence issued in
favour of the driver was to ply Light Motor Vehicle (LMV) and hence the driver
could not have driven the vehicle in question. In that case too, the licence
was renewed for a period of twenty years i.e. from February 5, 2000 to February
4, 2020. Again, there
was no endorsement as required by Section 3 of the Act. A specific plea was
taken by the Insurance Company but the Authorities held the Insurance Company
liable which could not have been done. The reasoning and conclusion arrived at
by us in the matter of Prabhu Lal (SLP No. 7370 of 2004) would apply to the
case of Nasir Ahmed. That appeal is, therefore, allowed.
Chandra Prakash Saxena (SLP No. 17794 of 2004), the vehicle involved in
accident was a Jeep Commander made by Mahindra & Mahindra, a passenger carrying
commercial vehicle, and in view of the fact that the driver was holding licence
to drive Light Motor Vehicle (LMV), he could not have plied the vehicle in
question. For the reasons recorded hereinabove in the main matter of Prabhu Lal
i.e. SLP(C) No. 7370 of 2004, the Insurance Company could not have been held
liable and that appeal also deserves to be allowed.
For the foregoing reasons, all the three appeals are allowed and the orders
passed against the Insurance Company are set aside holding that the Insurance
Company cannot be held liable. There shall, however, be no order as to costs.