Holding

The insurance company is liable to satisfy the award, as the burden of proving a licence breach rested on it and no such breach was established.

Summary

A pick‑up van owned by a partnership firm was involved in a road accident that killed one passenger and injured another. The victims' heirs claimed compensation, and the Motor Accident Claims Tribunal awarded Rs.75,000 and Rs.3,000 respectively. The insurer argued that the policy was void because the driver, a partner of the firm, allegedly did not possess a valid driving licence, a condition of the contract. Both the Tribunal and the Bombay High Court accepted this argument and held the insurer not liable. The Supreme Court reversed, holding that the burden of proving a breach of the licence condition rested on the insurer, that a partner drives with the firm’s permission and thus falls within the policy’s coverage, and that no evidence was produced to show the licence was invalid. Consequently, the Court ordered the insurer to pay the award with 12% interest and costs.

Issues considered

Whether the insurance company is liable under the comprehensive policy despite the driver being a partner of the firm.
Whether the driver possessed a valid driving licence at the time of the accident.
Who bears the burden of proof for a breach of the licence condition in the insurance contract.
How the clause permitting drivers "in the insurer's employ or with his permission" should be interpreted.

Legislation cited

Motor Vehicles Acts. 95
Partnership Acts. 12, s. 18, s. 26

Subjects

Motor Vehicles ActInsurance contractDriving licenceBurden of proofPartnership lawComprehensive insuranceCompensation awardAccident liability

Judgment

951
A
•
NARCINVA V. KAMAT AND ANR. ETC.

v.
ALFREDO ANTONIO DOE MARTINS AND ORS. B

April 25, 1985

(D.A. DESAI AND RANGANATH MISRA, JJ.J

Motor Vehicles Act:
-··""'-..._ c
' Accident claim-Mo._tor vehicle owned by partnersh•p firm-Driven by one
of the partrrers-Accident occ~rs-Whether breach of _contract of insurance policy-
lnJurance company wherh"er absolved from liability-Burden ofpfoof whether lies
on insurance conzpany.

In a road accident that took place tw·o ladies were injured. One succum- D
bfd to her injuries. The offending vehicle was a pick-up van belonging to a
firm and was being drive·n by one of the partner~. Two claim petitions were
filed one by the heirs of the deceased and the other by the injured. The !\1otor
Accident Claims Tribunal held that the van was being driven at the relevant
time rashly and negligently. "fhe Tribunal awarded Rs. 75,000 as compensation
to the heirs of the deceased and Rs. 3,000 to injured.
E
Before the Trib\lnal the Insurance company contended that according to
the 'terms of the contract of insurance as evidenced by the policy of insurance,
the vehicle can be driven either by a driver in tlie emplo:,.·ment of the insured or
with the permission of the insured by one who holds a valid driving licence.
The Tribunal found that at the time of the accident, the vehicle was being
driven by appe11ant No. 2, the partner of the firm, which was the owner of the
vehicle and as the driver did not produce his driving licence, held that the .F
driver did not have a valid driving licence and, in the absence of a valid driv·
ing licence. there was a breach of the contract of insurance and the insurance
company was absolved from the liability under the policy of insurance.

A Division Bench of the High Court confirmed the findings of the Tri-
bunal and dismissed the appeals by the firm and its partners.
G
On the question whether the insurance company under the contract of
insurance is liable to satisfy the award, partly allowing the appeals,

,HELD : 1. The insurance company h<i.s failed to prove that there was a
b~each of the term of the contract of insurance as evidenced by the policy of
insurance on the ground th at the driver who was d1 ivifig the vehicle at the rele- ·
vant time did not h::ive a valid driving licence. Once the inSUrance company
failed to prove that aspect, its liability under the cont1act of insurance remains H
952 SUPREME COURT REPORlS [1985] 3 s.c.R.

A intact and unhampered and it was bound to satisfy the award under the com-
prehensive policy of insurance. [959B-D'l· ·

2. The award of the Tribunal as well as the judgment of the High Court
are modified. The Insurance Company is to satisfy the award with interest at
12 per cent from the date of the accident till payment. [9590-EJ

B' 3.- Where the pick-up van belonging to the firm is being driven by a part-
ner, it can be said that it is done with the permission of the owner of the firm
or with its implied authority. [956E]

While dealing with the question whether the partner had a valid driving
licence at the relevant time, both the Tribunal and the High Court fell into an
error which resulted in giving a clean chit to the insurance company. Admit-
(' tedly this pick up van could be used as a private carrier and the insurance
--:ompany had issued a comprehensive insurance policy in respect of this va·n
and at the relevant time it was in force. [9.46E-G]

5. If a breach of a term of contract permits a party to the contract to .not
to perfrom the contract. the burden is squarely on that party which complains
of breach to Prove that the breach has been committed by the other party to
D the contract. The test in such a situation '\\'Ould be who would fail if no evi-
dence is led. [957B-CJ

In the instant case, not an iota of evidence has been led by the insurance
company to show that the second appellant did not have a valid driving licence
to drive the vehicle. The High Court took no nvti~e of the fact that the van be-
E longed to the firm and every partner for th1t reason would be the owner of the
prope;ty of the firm. It limited its enq 1iry to a~certain whether the driver was
in the employ of the iosurer. It completl!1y ov{'rlooked the fact that the driver
appeltant No. 2 was driving with the permission of the insured, the firm in
this case. [957CH; 951A-B]

6. On a proper analysis and iuterpretation of the term of contract of
insurance, the insurance company cannot escape the liability if (a) the insured
F himsc1fwas driving the.vehicle or (b) the driver was in the employment of 1be
insurer and was driving on the order of the insurer or not being in such emp..
loyment was driving under order of the insurer or (c) wilh his permission.
[958B-CJ

7. The burden to prove that there was breach of the contract of insurance
was squarely placed on the shoulders of the insurance company. It could not
G be said to have been discharged by it by a mere question in cross-e~amination.
The second appellant was under no obligation to furnish evidence so as to en·
able the insurance company to riggle out its liability under the contract of
insutance. Further the R.T.A. which issued the driving licence keeps a record
of the licences issued and renewed by it. The insurance company could have
got the evidence produced to substantiate his allegation . .A.pplying the test who
would fail if no evidence is led, the obvious answer is the insurance company.
H [958G-H; 959Al
•

N.V. KAMAT v. A. A. D. MARTINS (Derai, J.). 953

CIVIL APPELLATE JURJSDICTIO:<: Civil Appeal Nos. 1538- A
39 of 1985.

From the Judgment and Order dated 25.4.1984 of the Bombay
High Court in First Civil Appeal Nos. 37/S and .38/8 of 1980.

SJ<. Mehta for the Appellants. B

Jitendra Sharma for the Respondents.

The Judgment of the Court was delivered by

._ '°' .DESAI, J. A monopoly successfully avoided its legally in-
~curred liabiliiy on the wholly untenable ground. That is the
c
scenario in these appeals. Oriental Fire and General Insurance
Company Ltd., a nationalised company having the monopoly of
general insurance is the Fifth Respondent in the first appeal and
the second respondent in the second appeal. ,It would be refer·
red to and 'insurance company' hereinafter. D

An accident occurred on Praca de Jorge Barrete Road,
Margao on May 17, 1976 around 10.30 A.M. in which one Sita
Gomes and her sister-in-law Ida Menezes were injured. Ida
succumbed to her injuries and Sita Gomes recovered. The offen-
ding vehicle was a pick-up van belonging to M/s. Narcinva V. E
Kamat, a firm carrying on 'business at Mar.gao, Goa. The vehicle
was insured with the insurance company. Two petitions claiming .
compensation came to be filed ; one by the heirs of Ida and the
other. by· Sita. The 'Motor Acc.ident Claims Tribunal (Tribunal
for short) held that the driver of the van was responsible for F
the accident as the van was being driven at the relevant time,
rashly ·and negligently. The Tribunal awarded Rs. 75,000 as
compensation to the heirs of Ida and Rs. 3,000 to Sita.

In the proceedings before the Tribunal, the Insurance Com-
pany, appeared and contended that according to the terms of the G'
contract of insurance as evidenced by the policy of insurance,
the vehicle can be driven either by a driver in the employment of
the insured or with the pen11ission of the insured by one who holds
a valid driving licence. In respect of this contention the Tribu-
nal' , framed issue Nos. 7 and 8 in both the petitions in the fol-
lowint: terms.: ff
•

954 SUPREME COURT REPORTS [l 985] 3 S.C.R·
A "7. Whether the respondent No. 6 (insurance com-
pany) proves that there is no liability on them as the
respondent No. 2 Narcinva Kamat who was driving the
vehicle involved in the accident was not holding any effec-
tive driving licence ?

B. 8. Whether the respondent No. 6 proves that under
the provisions of Sec. 95 of the Motor Vehicles Act and
the policy in force their liability in any event is limited
to the extent of Rs. 50,000 in all both in respect of this
Claim Petition as well as other Claim Petition filed in
the same Tribunal on account of the same accident being
c Claim Petition Nos. 22-23/76 filed in the Trib'unal on
account of the same accident."

The Tribunal answered both the issues in favour of the
insurance company observing that at the time of the accident the
vehicle was being .driven by appellant No. 2, the partner of the
D.
firm, which was the owner of the vehicle and as the driver did not
produce his driving licence, it must be held that the driver did
not have a valid driving licence. The Tribunal therefore, con-
cluded that in the absence of a valid driving licence, there was a
breach of the contract of insurance and the insurance company
E was absolved from the liability undor the policy of insurance.

The firm and its partner proforred two appeals before the
Panaji Bench (Goa) of the High Court of Bombay. A Division
Bench of the High Court agreed with the findings of the Ttibu-
nal and dismissed the appeals. Hence these appeals by special
F leave.

The scope of the appeals is very limited. The appeals are I
by the firm, owner of the vehicle which was involved in the acci-
dent and one of its partner who it was alleged was shown to be
driving the vehicle at the time of the accident and while granting
G
leave it was limited to the question : whether both the Tribunal
and the High Court were justified in holding that the insurance
company was not liable to satisfy the award under the contracts of
insurance.

The undisputedJacts are that the pick-up van-motor vehicle
11. bearing No. GDT-9510 belong' to: the first appellant-firm, and
N.v. KAMAT v. ;\, A. D. MARTINS (Desai, J.) 9)5

the second appellant is the partner of the firm. This vehicle
was involved in an accident that occurred on May 17, 1976 at
A
around 10.30 a.m. There is a concurrent finding that the vehicle
was driven rashly and negligently by the partner who was then
driving the vehicle and that in this accident, Sita and Ida suffered
injuries. Ida's .injuries proved fatal. The amount of the com·
pensation awarded in both the petitions is no more open to dis- B
pute. The question is whether the insurance company under the
contract of insurance is liable to satisfy the award ~

Before the Tribunal and the High Court, it was. contended
on behalf of the appellants that at the relevant time, it was not
appellent No. 2 but one Pandu Lotlikar, who was respondent No. c
4 before the Tribunal was driving the vehicle. It has been con-
currently found that it was appellant No. 2 who was driving the
vehicle. The concurrent finding must be accepted as correct.

Appellant No. 2 is none other than the partner of the first
D
appellant-firm which.is the owner of the vehicle. The High Court
has extracted a term in the schedule of the policy of insurance
pertaining to the pick-up van which may be reproduced from the
judgment of the High Court.

"Driver : Any of the following :
E
(a) (deleted in type)
(b) any other person provided he is in the Insnred's
employ. and is. driving on his order or with his per-
mission.
F
Provided that the person driving holds a licence to
drive the Motor Vehicle or has held and is not disqualified
for holding or obtaining such a licence."

·we have reproduced this term from the judgment of the
G
High Conrt because the learned counsel for the insurance com-
pany did not have a copy of the policy of the insurance nor
the one was shown from the record. Of course, the Tribunal re-
cords that the vehicle was· insured as a private carrier aild this was
culled out from the claim form submitted on October 14, 1976.
It is produced at Ext. 37. One Jaimo Albert was examined on H
956 SUPRB!IE COUkT RBPORTS [I 985) 3 s.C.lt.
A behalf of the insurance company. He was shown Ext. 29 which
was identified as a copy of the policy of insu·rance issued by the
insurance company in favour of the first appellant. He admitted
tliat it was a comprehensive policy meaning thereby 'that the
in~~rance company would be liable .to satisfy the claim of damage
ar1smg out of the use of the vehicle. He does not speak ofany
B other term of the contract of insurance.

Now would the insurance compnay be discharged from the
liability under the contract of insurance if as contened by it, at
the relevant time, appellant No. 2 was driving the vehicle. Appel-
lant No. 2 is the partners of the firm. All the partners of the firm
C if they have a valid driving licence would be entitled to drive
the vehicle. Each partner of the firm is an agent of the firm as
well as the other partner as provided by Sec. 18 of the Partnership
Act. Every partner is entitled to attend diligently to his duties in
the conduct of the business as provided in Sec. 12 of the Partnership
D Act. Sec. 26 provides that 'where by the wrongful act or omission
of a partner acting in the ordinary course of the business of a firm,
or with the authority of his partners, loss or injury is caused to any
third party, or any penalty is incurred, the firm is liable therefor
to the same extent as the partner.

E A conspectus of these provisions shall show that where tl;e
pick' UP van belonging to the firm is being driven by a partner, it
can be said that it is done with the permission of the owner namely,
the firm or with its implied authority.

The next question is whether the partner had a valid driving
F licence· at the relevant time. Unfortunat\y, while dealing with
this aspect of the case, both the Tribunal and the High Court
fell into an error which resulted in giving a clean chit to the insu-
rance company. It is admitted. that this pick-up van could be !
used as a private carrier. It is also admitted that the insurance
company had issued a comprehensive insurance policy in respect
G of this vau and at the reievant time it was in force. '

It is contended on behalf. of the insurance company thil1
the second appellant did not have a valid driving licence. It is
the insurance company which complains that there has been a
breach of one of the important terms of the contract of insurance
H as evidenced by tl1e policy of insurance (the whole of which was
' N.V. KAMAT v. A. AD. MARTINS (Desai, J.) 951
not shown to us) and that the second appellent who was shown A
to be driving the vehicle at the relevant time, did not have a
:valid driving licence to drive the pick-up van. The insurance
company complains of breach of a term of contract which would
permit it to disown Its liability under the contract of insurance.
If a breach of a term of contract permits a party to the contract
to not to perform the contract, the burden is squarely ou that B
party which c~mplains of breach to prove that the breach has been
committed by the other party t.o the contract. Thel test in such a
situation would be who would fail if no evidence is led. The
language and the format in which issues Nos. 7 and 8 have been
cast by the Tribunal clearly casts the burden of proof ont he insu-
rance company. Not an iota of evedence has been led by the c
insura·nce company to show that the second appellant did not have
a valid driving licence to drive the vehicle. Mr. J. Sharma,
learned counsel who appeared for the appellant urged that a ques-
tion was asked in the cross-examination o( the ,second appellant
whether he would produce his driving iicence, and that as he D
failed to produce the same an adverse inference must be drawn
against him that he did not have a valid driving licence. The
High Court has recorded a finding in this behalf which may first
be extracted in its own words:

"Mr. Cardoso 's contention proceeds on a misreading E
of clause (b) indented above, which brings to the fore-
front that the person driving the vehicle must be 'in the
insurer's employ' and further, being in such employment
was driving the vehicle on the order of the insurer or with
his permission. In this case, the very first premise is
missing for the simple reason it is not even the second F
appellant's case that he was every in the employment of
l. the first appellant firm but was at all material times a
partner thereof. Even if the first appellant held a valid
driving licence, clause (b) would not absolve him from
liability for payment, if the van had been driven by him
at the relevant time."

The High Court took no notice of the fact that the van
belonged to the firm and every partner for that reason would be
the owner of the property of the firm because tlie firm is not a·
legal entity in the sense in which the company under the Com- H
958 SUPREME COURT RBPOUTS (1985] 3S.C.R.

A panies Act has a juristic personality. Firm is a compendious
name for the partners. And the High Court limited its enquiry
to ascertain whether the first part of the condition is satisfied viz.
whether the driver was in the employ of the insurer. It com-
pletely overlooked the second clause th?t the driver appellant
No. 2 was driving with the permission of the insured, the firm
B in this case. Two clauses ·are disjointed by a dlsjuntive 'or'. On
a proper analysis and interpretation of the term of contract of
insurance, the insurance company cannot escape the liabi\ity if
(a) the insured himself was driving the vehicle or (b) the driver is
in the employment of the insurer and is driving on the order of
c the insurer or (c) he is driving with his permission. The words with
his permission does not qualify the expression 'is in the insurer's
·employ'.· The clause can be properly read thus : 'any other person
with insurer's permission.' This ought to be so because a friend
can alwyas be permitted if he has a valid driving licence to drive a
D friend's car. If in every such situation where the person driving
the vehicle is not shown to be the insurer himself or someone
in his employment, the contract of insurance would afford no pro-
tection and the insurance compauy having collected the premium
would wriggle out of a loophole. Therefore the proper construc-
tion of this condition. must be to read it as stated hereinbefor.e.
E
Approaching the matter from this angle, if appellant No. 2
was driving the vehicle belonging to the firm, it can be said to be
by the i.nsurer itself or with its permission.

F The last question is whether he had a valid driving licence.
The High Court has not recorded a clear cut finding on this point.
The finding of the Tribunal is more evasive then the one by the
High Court. Mr. Sharma did not dispute that the second
appellant had driving licence. His grievance is that he having
failed to produce the same when called upon to do so in the cross-
.G examination, an adverse inference be drawn against him that he
did not have a valid licence to drive a pick-up van. The submis-
sion fails to carry conviction with us. The burden to prove that
there was breach of the contract of insurance was squarely placed
on the shoulders of the insurance company. It could not be said
to have been discharged by it by a mere question in cross-exami-
nation. The second appellant was under no obligation to furnish
H evidence so as to enable the insurancf: company to riggle out its
li.v. KAMAT v. A. A. I), MARTINS (Desai, j,) '9$9
liability under the contract of insurance. Further the R.T.A A
which issues the driving licence keeps .a record of the licences
issued and renewed by it. The insurance company could have
got the evidence produced to substantiate his allegation. Apply-
ing the test who would fail if no evidence is led, the obvious ans-
wer the insurance company.
B
To sum up the insurance company failed to prove that there
was a breach of the term of the contract of insurance as evidenced
by the policy of insurance on the ground that the driver who was
driving the vehicle at the relevant time did not have a valid dri-
ving licence. Once the insurance company failed to prove that
aspect, its .liability under the contract of insurance remains in- c
tact and unhampered and jt was bound to satisfy the award
under the comprehensive policy ·of insurance.

Accordingly, both these appeals must succeed and are partly
allowed. The award of the Tribunal as well as the judgment of
the High Court are modified directing the Oriental Fire and
General Insurance Co. Ltd. to satisfy the award with interest at
12 per cent from the date of the accident •ill payment, and full
costs in favour of the original claimants. The full payment to
satisfy the award shall be made within a perid of two moths from
today.
E

A.P.J. Appea/s allowed.
F